Market Commentary | Markets Rally Continues

Global financial markets rallied today following a combination of the sole candidacy to succeed David Cameron as British Prime Minister, which reduced political uncertainty and the electoral success for Japanese Prime Minister Shinzo. The Japanese electoral success is set to award markets with another ten trillion yen (approx. €88 billion) in a new stimulus package. This means a third consecutive rise extending gains also after a stronger than expected US jobs report and with investors also relying on the possibility of more monetary easing by the central banks. Mining, industrial and technology shares were among the strongest gainers.

Despite a strong US jobs report figure, investors are still reluctant on whether the Federal Reserve will raise the interest rate, keeping in mind that Brexit will still have its effects. In fact, the Bank of England is set to initiate stimulus with a rate cut, and/or increase quantitative easing to counter effect the Brexit uncertainty.

On the Currency side, the US Dollar rose against a basket of major currencies and jumped around 1.9% against the Japanese Yen. Meanwhile, the GBP, which had earlier been down against the US Dollar, increased around 0.3% against the greenback, on the news that the only rival to Minister Theresa May withdrew from the Prime Minister race. Today the EUR was flat against the US Dollar trading at around 1.1048.

Prices of crude oil futures were shaky with a lower demand in Asia being the primary price mover, along with the higher output from Canada and Iran. Iran announced it regained 80% of the market share it had held before the sanctions in 2012. Meanwhile, the expanded production in Canada is threatening to clog pipelines and pulling down the country’s crude price to around $30 a barrel.

Aerospace …

The British Airline, Virgin Atlantic announced, it will purchase 12 Airbus A350-1000 aircraft. The deal is worth $4.4 billion. The sale means a lot to Airbus as its A350 sales were slowing down. This news increased Airbus group shares by around 2.4%.

Rolls-Royce Holdings Plc, the British multinational agreed to take over Industria de Turbo Propulsores, specialised in the production of aeronautical engines and components. The deal worth €720 million is for the 53.1% stake in the Spanish company owned by Sener Grupo de Ingeniería SA, while the British enterprise already owns the rest. This investment will add the company’s aerospace capability with facilities, services and products. Rolls Royce saw its share price fall by 1.5% to 723.99 pence.

A decade-long deal worth £3 billion ended when the UK government purchased nine new marine patrol planes from Boeing. This deal also covers the training, maintenance, and support. In its annual current market outlook, Boeing’s demand is expected to rise 4.1% reaching 39,620 by 2036 and is worth some $5.9 trillion. The company will create about two thousand new UK jobs by expanding its maintenance and support operations for both military and commercial customers in Europe. To this news, Boeing shares appreciated by around 1.60% and trading in the region of $132.

This article was issued by Rodrick Duca, 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.