Market Commentary | Markets continue climbing

Global stocks pushed towards a fourth consecutive win on Tuesday, with investors hanging onto brighter prospects for further global stimulus efforts, as the markets begin heading into the new earnings season. The MSCI all-country world index reached its highest level since 23 June, and the pound was up, as Home Secretary Theresa May prepares to take over as the next UK prime minister. Italian banks helped European shares higher, and US crude oil rebounded from a two-month low.

Tuesday was a sea of green in all global markets, as Asia, Europe and the US traded higher. A standout sector was the automobile industry. German automaker Daimler led the surge, as shares jumped 4.5% recording the best session since late August. This rise came on the back of a better-than-expected quarterly earnings report, posted on Monday. The company has also adjusted its profit outlook, and is now expecting a “slight increase” in profits for the full year. Its rivals, BMW, Renault and Volkswagen, were also trading over 3% higher during Tuesday’s session.

Also gaining ground on Tuesday were banking shares. Barclays, Lloyds and Deutsche Bank all posted gains, with Deutsche Bank surging as much as 6.4%. Italian lenders were among the biggest gainers, as Banca Popolare di Milano climbed 6.7% and UniCredit added almost 14%.

With the potential for lower borrowing costs, shares of house builders topped the FTSE 100 during Tuesday’s session. Shares of Taylor Wimpey jumped as much as 6.7%, but were unable to hold on to such gains, and closed the session 3.2% higher. Barratt Developments, Persimmon and Berkley group were all up too, posting gains of around 1.5% each.

Among decliners, Vodafone plc lost some ground on Tuesday, after a downgrade from Citigroup. The investment analyst company downgraded the mobile communications company’s status from a “buy” rating to a “neutral” rating in a report issued on Tuesday. Vodafone shares lost 1%, and were trading at £2.28.

Oil futures rallied on Tuesday, rebounding from a two-month low, as a report from the Organisation of Petroleum Exporting Countries (OPEC) revealed forecasts for higher oil demand and lower production next year. This was music to the ears of crude, as prices were up 4.16%, trading at $46.62. Brent crude was also 4% higher, trading at around $47.50 per barrel.

One company that has been enjoying a strong surge in its share price this week is Nintendo. Just a couple of days after releasing its latest game, Pokemon Go, this game has already become a viral sensation. Nintendo and its partners are rumoured to be earning more than $1 million per day thanks to their new game. Nintendo shares have soared over 45% since the release of Pokemon, and are trading at ¥22,840 (€0.0087).

Meanwhile, investors are looking at the potential for an interest rate cut by the Bank of England. BOE Chief, Mark Carney, was testifying at the Treasury Committee to discuss the central bank’s financial stability report. For the first time in more than seven years, analysts are finally expecting some action on UK interest rates when it meets for its first post-Brexit policy decision on Thursday.

This article was issued by Rebecca Naudi, 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.