Gold taps highs as dollar slides

European markets slipped into negative territory on Monday, dragged down by a weak session in Asia and a rough day in the banking sector. Activity in Europe was dulled by the absence of London, which was closed due to the May Day bank holiday. On Wall Street, US stocks struggled to make substantial headway, after a mixed set of manufacturing and construction data showed a slow but steady growth in the US economy after a disappointing first quarter.

Japanese stocks fell sharply on Monday, causing a ripple effect across Asia. As the yen surged to a new yearly high against the dollar, this is impacting Japanese exports. Weak earnings results from several local firms, as well as a selling spree after the Bank of Japan’s inaction on Thursday, are taking their toll on the market.

Several banks started the month on the losing side on Monday. Italian banks were lower after the latest government measures aimed at tackling the sector’s pile of bad loans fell short of expectations. Shares in Intesa Sanpaolo dropped 1.65% after the lender said it would sell its Setefi and Intesa Sanpaolo card payments units for a little over €1 billion in cash to a consortium of private equity funds as part of its strategy to focus on its core business. This led several other Italian banks trade lower. UniCredit tumbled 4.39% and Mediobanca surrendered 3.69%.

However, Germany’s Dax rose 0.8% after data showed factory activity in Europe’s biggest economy rose to a three-month high in April, buoyed by rising demand at home and abroad.

The automobile industry was broadly higher after some positive data for the sector. Ferrari shares traded higher, as the sports car maker raised its forecasts for 2016. The Italian company reported a rise in profit during the first quarter, thanks to growth in sales on its new sports car models. BMW and Volkswagen also traded in the green, and were up 0.50% and 0.16%, respectively.

Also enjoying yet another positive session were precious metals. Nothing seems to be slowing down the gold market right now, amid renewed demand for stores of value. Gold futures headed higher for a sixth straight session, and surpassed $1,300 an ounce during Monday’s session, but retreated slightly to close the day up 0.5% at $1,297.

Shares in Apple dropped 0.96%, the eighth straight day of decline for the company. This fall came on the back of news that worldwide shipments of tablets fell 15% during the first quarter of the year as ‘overall disinterest’ for the product hit record highs. 

During the European Central Bank monetary policy meeting in March, it announced the planned buyback of an average of €80 billion worth of bonds per month, up from the previous target of €60 billion. This commitment was kept, as the ECB reportedly bought €85.2 billion of debt last month as it boosted purchases in its quantitative-easing programme. The ECB governing Council gathers for its next monetary policy meeting on June 2 in Vienna.

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 Investment Services Ltd. has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.