Weekly Trading Update
28.02.14 Friday Morning
Global equities have yo-yoed this week, with many elements around the globe playing on investors’ minds. Markets started the week lower after it emerged Chinese medium-sized banks are tightening financing to property developers as authorities try to increase the quality of credit on offer. With the Hang Seng Index heavily weighted by property stocks, the index took the brunt of the report to trade 1.1% lower. The tightening, which is likely to remain until end of March, is viewed as a negative in the short-term as the authorities try increase the quality of credit on offer to help overall growth.
Market participants kept a close eye on the conflict arising from Ukraine over the weekend. Headline currencies started the week on a tentative note ahead of the European open as political unrest in Ukraine showed signs of settling down. Ukraine’s parliament voted on Saturday to remove President Viktor Yanukovich, with freed Yulia Tymoshenko as the replacement. This initially calmed protestors until the end of the week when it emerged protesters in Crimea stormed parliament buildings. Crimea, a Black Sea peninsular attached to the rest of Ukraine, has become the last major stronghold of resistance to Ukraine’s new rulers. With the latest changes in Kiev, protesters are now trying to exploit the chaos and press demands for Russia to reclaim the territory. This created ripples of nervousness through the markets as Russia ordered a series of surprise military exercises along its border with Ukraine late Wednesday. The United States has warned Russia against a military intervention in Ukraine with US Secretary of State John Kerry stating Russia should be “very careful” in how it proceeds in Ukraine.
On a few occasions, European markets remained very hesitant in the morning sessions before a late rally once the American markets came into play. US markets shrugged off global concerns with the S&P closing on Thursday at a record high. Comments from Federal Reserve Chair Janet Yellen gave some relief to investors that the unusual cold weather appears to be behind the recent sign of weakness in the US economy. The frigid weather in the US sent Natural Gas prices soaring, advancing as much as 5.6 percent on Monday after analysts boosted the energy demand outlook and as US Inventory data showed that supplies dropped to the lowest in a decade.
Economic data has been somewhat mixed this week with German Ifo Business Climate starting the week in a positive note. The figure from Europe’s leading economy came in above expectations at 111.3, up from the forecast of 110.7. However, data from the US has been slightly worse with CB Consumer Confidence data and weekly Unemployment Claims both coming in worse than expected. CB Consumer Confidence, which is a leading indicator of consumer spending, came in at 78.1 versus 80.2 whilst more Americans filed applications for unemployment benefits last week, increasing 14,000 to 348,000.
Stock of the week – Royal Bank of Scotland
Shares in Royal Bank of Scotland fell sharply on Thursday after the troubled company reported its biggest annual loss since being rescued by the UK government during the financial crisis. RBS reported an £8.2bn loss for 2013, the sixth annual loss for the bank. Shares in the 81% UK taxpayer owned bank closed down 7.7% on Thursday to 326.6p.
Open (Monday)
6820
Close (Thursday)
6802
Change
-0.26%
High
6886
Low
6730
Open (Monday)
16130
Close (Thursday)
16291
Change
1%
High
16302
Low
16115
Open (Monday)
1321
Close (Thursday)
1327
Change
0.45%
High
1345.5
Low
1321
Open (Monday)
1.6627
Close (Thursday)
1.6735
Change
0.65%
High
1.6743
Low
1.6584
Economic data:
Monday
- CNY HSBC Final Manufacturing PMI
- GBP Manufacturing PMI
- ECB President Draghi Speaks
- USD ISM Manufacturing PMI
Tuesday
- AUD Building Approvals
- AUD Cash Rate and RBA Rate Statement
- GBP Construction PMI
Wednesday
- AUD GDP
- GBP Services PMI
- USD ADP Non-Farm Employment Change
- USD ISM Non-Manufacturing PMI
Thursday
- AUD Retail Sales
- AUD Trade Balance
- GBP Asset Purchase Facility and Official Bank Rate
- GBP MPC Rate Statement
- EUR Minimum Bid Rate
- USD FOMC Member Dudley Speaks
- EUR ECB Press Conference
- USD Unemployment Claims
Friday
- USD Non-Farm Employment Change
- USD Trade Balance
- USD Unemployment Rate
Earnings calendar:
Monday
- Intertek Group – Earnings release
- Thornton’s – Earnings release
- Earthport - Earnings release
Tuesday
- Pace – Earnings release
- Meggitt – Earnings release
- Perform Group – Earnings release
Wednesday
- Michael Page – Earnings release
- Admiral Group – Earnings release
- Standard Chartered – Earnings release
- Melrose Industries – Earnings release
- SOCO International – Earnings release
- Lookers – Earnings release
Thursday
- DS Smith – Interim Management statement
- Balfour Beatty – Earnings release
- Imagination Technologies – Interim Management Statement
- Cineworld Group – Earnings release
- Schroders – Earnings release
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