Market commentary: Central banks in action

European futures are indicating a softer open this morning, taking over from Asia which is currently trading flat to lower. Oil continued its downward trend with both Brent and WTI falling 0.80% and 1.29% respectively. The energy and commodities sector continue to be high on the agenda for international investing, and developments in this sector are closely watched by investors and analysts alike.

During the course of yesterday, European shares traded higher with the Euro Stoxx edging higher by more than 1.5%. Over in the US, the S&P managed to halt its streak of losses as the benchmark closed flat with a slight increase of 0.31% over the previous session. The Dow Jones closed 0.06% lower and the NASDAQ outperformed the latter, as it closed the session at the 5139 level, meaning a 0.67% increase from the day before.

US payrolls are due to be reported tomorrow, and these now have an extra importance as the US yesterday reported a high ISM of 60.3, versus  the 56.2 figure the market was expecting. The main underlying theme and the importance of these figures continue to be the timing of the Fed increasing its rates as many will continue to debate whether there is a positive trend of data that will justify a hike.

There seems to be a consensus that this will happen in September. September is now round the corner and not a distant date anymore. However, Fed Chairwoman Yellen has stated on several occasions that emphasis should be place on the pace of the subsequent rate hikes rather than on the timing of the first rate hike.

On the equity front, we have Telecom Italia and Deutsche Post reporting amongst other European giants. Deutsche Post’ shares increased by more than 4% year to date as at yesterday. The company is better known for its flagship trademark DHL which provides mail and courier services.

In terms of economic data, the main story is the Bank of England. At midday today, Governor Mark Carney will announce the August interest rate decision together with officials’ votes and new forecasts. There seems to be a case for a rate hike which is stronger than ever before. More than an actual rate hike, it would be interesting to follow whether the tone within the Bank of England has changed and how the officials will vote and in what ration whether in favour or against.

This article was issued by Darin Pace, Treasury Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.