Weekly Trading Update
08.08.14 Friday Morning
With markets selling off aggressively last week, investors started the week, hesitant to add to risk. Markets soon regained some of the losses on Monday afternoon as a last minute rescue for one of Portugal’s biggest banks injected some life back into the markets. Portugal’s central bank took control of Banco Espirito Santo SA in a 4.9 billion-euro bailout. Banco Espirito Santo has been forced to take government money after regulators uncovered potential losses on loans to other companies tied to Portugal’s Espirito Santo family. Banco Espirito Santo will now be shut down, with its healthy businesses transferred to a new bank.
Uncertainty crept back into the markets by mid-week on escalating tensions in Ukraine resurfacing. Russian President Vladimir Putin ordered his government to respond to the US and European sanctions after Poland said the build-up of Russian troops on Ukraine’s border raises speculation of a possible invasion. With sanctions being imposed on Russia by the US and Europe, Putin has announced the government will retaliate against the sanctions. Russia threatened a ban of flights over Siberia by European carriers bound for Asia to retaliate against sanctions levied against the country.
The threat soon came to life, with Putin imposing a total ban on imports of many western foods in retaliation against sanctions over Ukraine. This will isolate Russian consumers from world trade to a degree unseen since Soviet days. European Central Bank president Mario Draghi described the European recovery as weak and highlighted the sanctions imposed on Russia could play a part on damaging the European recovery. During his ECB press conference, Mario Draghi gave a frank assessment of the difficulties facing the 18 countries that use the euro. The Bank of England and the European Central Bank kept interest rates unchanged at 0.50% and 0.15%, as many expected. The dollar had a good week, holding near 11-month highs against a basket of major currencies, supported by upbeat US data. With non-farm payrolls and GDP exceeding estimates last week, non-manufacturing PMI and weekly unemployment claims also added to positivity. With data exceeding estimates, this will provide further ammunition for the Federal Reserve to hike rates.
A sell-off during the early hours of trading on Friday was caused after President Barack Obama announced he has authorised US air strikes to blunt the onslaught of Islamist militants in northern Iraq. By the end of the week, the DAX had dropped by over 3% this week, erasing all yearly gains to trade 7% lower for the year.
Stock of the week: Aviva
The British multinational insurance company reported their 1H results which came in just ahead of expectations. Operating profits rose 4% and the interim dividend was up 4.5% to 5.85p. After the results, Panmure Gordon reiterated their Buy recommendation as they believe the outlook for the final dividend is particularly positive. Shares rallied 3% to 505p. With the FTSE down 1%, Aviva enjoyed a 3% rise on Thursday.
Open (Monday)
6679
Close (Thursday)
6586
Change
-1.39%
High
6714
Low
6526
Open (Monday)
16587
Close (Thursday)
16291
Change
-1.78%
High
16612
Low
16260
Open (Monday)
1.6817
Close (Thursday)
1.6811
Change
0.04%
High
1.6889
Low
1.6797
Open (Monday)
1294
Close (Thursday)
1319
Change
1.90%
High
1324
Low
1283
Monday
- USD FOMC Fischer Speaks
Tuesday
- AUD Business Confidence
- EUR ZEW Economic Sentiment
Wednesday
- CNY Industrial Production
- GBP Claimant Court Change
- GBP Carney Speaks
- USD Retail Sales
Thursday
- EUR German and French Prelim GDP
- USD Unemployment Claims
Friday
- GBP Second Estimate GDP
- USD PPI
- USD Prelim UoM Consumers Sentiment
UK & US Earnings:
Monday
- ICU Medical
Tuesday
- Serco Group – earnings release
- Prudential – earnings release
- Just Eat – earnings release
Wednesday
- Michael Page – earnings release
- Balfour Beatty – earnings release
- Admiral Group – earnings release
- Pennon Group – interim management statement
- Lookers – earnings release
- Cisco Systems
Thursday
- Cineworld – earnings release
- Wal-Mart
- J.C Penny
Friday
- JD.com – earningsIt's easy to open an account
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