Market Commentary | Ready, set, rally

Global bourses started the week with a bang, helped by restored confidence in the US economy after very positive employment figures and hopes for expanded fiscal stimulus in Japan. Most sovereign bond yields rose as investors were keen to take on riskier assets in favour of safe havens, such as the 10-year US Treasury, while the yen fell drastically against a basket of currencies.

Stock market gains in the land of the rising sun stopped just shy of 4%, the best 1-day gain in nearly three months. The Nikkei rallied hard as the current ruling coalition in Japan won enough seats in the upper house to have a two-thirds majority. Additional fiscal stimulus should be much easier to approve – indeed additions to the current fiscal package are expected to be rolled out this autumn. The yen gave up ground against the US dollar after Brexit-led demand pushed it below the 100-yen mark for the first time in three years. By Monday morning, the Japanese currency was trading at 102 against the dollar and 112.50 against the Euro.

The optimism also helped European equities rally, with banks and commodity producers leading the pack. Banca Monte dei Paschi di Siena was topping the charts with a 7% gain on open. Markets in France and Germany are up at least 1% at time of writing, while the broader Stoxx 600 index and the FTSE 100 are lagging slight behind, although still in positive territory.

Brexit Side-Effects

In case you missed it, it was a great sporting weekend for the UK. Lewis Hamilton won the Silverstone Grand Prix, his home turf and Andy Murray briefly became British after he beat Milos Raonic for this year’s Wimbledon title. Serena Williams won the women’s final. She and Murray both bagged a cool £2,000,000 each. For Serena Williams, that means $2,590,000 – a staggering figure which could have been higher. The Brexit-led depreciation of the British pound versus the dollar means she will be taking home $380,000 less than she would have before the referendum vote.

Conversely, England and Wales will get a bigger bang for their buck after being eliminated after 24 June. England took home €11.5 million, whilst Wales pocketed an extra €6 million for a total of €18 million. That prize money is worth at least 5% more after the UK voted for an exit from the European Union.

This article was issued by Andrew Martinelli, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are 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.