Market commentary: New month, same descent

Markets got off to a cautious start on Monday, the first day of February, after a rocky January led markets to trade in negative territory. Despite intervention from the European Central Bank, the Federal Reserve Bank leaving interest rates unchanged and the Bank of Japan adopting negative interest rates, a sense of uncertainty still lingers among investors.

European stocks continued to lose ground on Monday as fading hopes for an oil supply cut and disappointing manufacturing data from China send most Asian and European shares tumbling.

Low-cost airline giant Ryanair was in the news, after the company announced average fares will continue to fall as much as 6% in the coming months as a result of lower fuel prices. Ryanair have also announced their profit after tax has increased over the three months ended December, to €103 million.

Last year, Ryanair was the first airline in the world to carry 100 million international passengers. Commerzbank described the company as a “cash machine”, with company CEO Kevin O’Leary saying Ryanair is set to generate around €2 billion per year. Mr O’Leary went on to say that the company will share its proceeds with investors, via a record €800 million share buyback.

Europe’s largest lender, HSBC, is allegedly imposing a hiring and pay freeze across the bank globally in 2016. This news comes after the board met last week to consider moving headquarters to Hong Kong and focusing on the bank’s strategy. Consequently, shares were trading lower on the day.

Staying with big banks, Barclays and Credit Suisse have been fined a total of $154 million by U.S. regulators for misconduct and misleading investors using the platform of ‘Dark pooling’. Dark pool operations allow investors to trade large blocks of shares, but keep the prices private and unavailable to the public. Shares in Barclays were down by 1.70% on the day, with Credit Suisse shares falling 3.20%.

Twitter shares started the week on a high. When one considers that Twitter had seen a 41% tumble in shares over the past three months, investors will be happy to know that they were up 8% in pre-market trading. Shares kept up that momentum during the day, trading well in the green. This surge came as a result of rumours of a possible takeover, with venture capitalist Mark Andreessen and Silver Lake partners thought to be interested in buying.

With the current turmoil in the markets, risk-averse investors have once again found safety in trading Gold futures.  April gold gained $8.50, or 0.8%, to trade at $1,124.90 an ounce. It is good to keep in mind that, when all isn’t plain sailing, gold remains a natural safe haven for anyone with exposure to a weak currency.

During this week, of particular importance will be Friday’s economic news on Nonfarm Payrolls, which could prove valuable when analysing the possibility of a Fed rate hike in March.

This article was issued by Rebecca Naudi, Trader 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.