Spreadex Market Update
Markets hold gains
By now, even those most detached from the financial industry will have probably heard about the fixing of LIBOR, a rate against which nearly all derivatives are priced.
Investors realise that the incentive structures of financial behemoths of the last crisis and of today provided scope not only to create a fierce will to make money but to potentially invoke actions that are sometimes morally questionable and indeed unlawful.
And Barclays, it seems, has not acted alone in this scam, with other banks soon to face investigation.
How much damage the manipulation of LIBOR might cause to these banks, their reputation, and their investors’ confidence remains to be seen.
But there’s certainly little upside to be taken from the announcement.
Barclays is down by more than 10% in late morning trading after opening higher this morning in spite of the headlines seen yesterday and today. The 10% move in the stock highlights volatility and the ability for sentiment to significantly change.
Important, too, is to consider the building momentum of public scrutiny. Whilst the settlement figure of £290m is damaging, the market has wiped more than £2bn from the market capitalisation of the bank in a matter of hours. Clearly, the market currently believes the monetary impact of future uncertainty to be more significant than the settlement figure alone. But, as this morning’s calm open illustrates, prices are subject to change.
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