Weekly Trading Update
20.01.12 Friday Afternoon
While many investors hoped this week would see higher volumes and volatility than the first week of 2012, trading finished with more of a whimper than a bang. This was down to continued European fears and a prosaic start to quarterly earnings season. Ratings agency Fitch cut four Hungarian banks and Mario Draghi noted his concerns about the stability of the state as one of the serious risks remaining in the Eurozone.
Nicolas Sarkozy responded to rumours about a French downgrade, calling the ratings agencies ‘exasperating’. The Swiss National Bank reiterated its commitment to keeping the franc pegged to the euro at or above the 1.2 level, and central bank chairman Philipp Hildebrand resigned after news leaked about a controversial currency trade on his wife’s account just weeks before the initial pegging.
Headwinds on the high street limited equity gains. Outdoor equipment store Blacks, recently placed in administration, was sold to JD Sports for £20m. Sports Direct, 21% owner of Blacks, expressed disappointment that their earlier bid was rejected and estimates it has lost over £50m in equity in Blacks over the last two years.
Supermarkets further highlighted the tough consumer environment. Tesco’s Christmas trading fell short of expectation and Britain’s largest grocer issued its first profit warning in over 20 years. Wm Morrison and Sainsburys shares also felt sector knock-on.
In the US, two DOW constituents reported. Alcoa’s Q4 earnings were disappointing, and the metals manufacturer blamed charges associated with limiting its smelting operations. JP Morgan’s results were also a bit short, with investment banking revenues down 52% compared to 1 year ago, though commercial and retail banking making good strides.
Open (Monday)
5649.68
Close (Thursday)
5653.01
Change
+0.05%
High
5710.27
Low
5605.29
Open (Monday)
12360.15
Close (Thursday)
12471.02
Change
+0.89%
High
12513.75
Low
12336.08
Open (Monday)
1611.6
Close (Thursday)
1648.2
Change
+2.27%
High
1662.8
Low
1607.3
Open (Monday)
1.542
Close (Thursday)
1.5338
Change
-0.53%
High
1.5497
Low
1.5278
Monday will be quiet since US equity markets are closed in observance of Martin Luther King Jr Day. Statements from Rio Tinto and Burberry come on Tuesday and Man Group on Wednesday.
It’s a big week for US banks, with quarterly earnings from Citigroup and Wells Fargo on Tuesday, Goldman Sachs on Wednesday, and Morgan Stanley, Bank of America, American Express and BB&T on Thursday. Tech giants Microsoft and Google also report after the close Thursday.
See our Economic Diary here.
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