A storm brewing? | Calamatta Cuschieri

With the US on holiday, Asian and European stock markets kicked off the week with mixed results in several markets. Financials were quite a drag on most bourses but the main story of the day was undoubtedly Kraft-Heinz pulling their offer for Unilever, as per the news wire on Sunday.

This morning was a bit more news-worthy, with Asia taking the lead as Toshiba announced it will be selling most of its flash memory business in order to raise sufficient cash to deal with its recent accounting losses and bolster its defences against potential future write-downs. The Japanese company is seeking at least 1 trillion yen, or just under $9 billion.

HSBC reported weaker than expected earnings, dragging down the FTSE

HSBC reported weaker than expected earnings, dragging down the FTSE as shares in the banking giant gave up more than 6% in early trading. The UK stock exchange was underperforming the rest of the European exchanges, which were trading up by a few basis points at around midday.

On the bond front, French paper remained under pressure as far-right candidate Marine Le Pen seems to be making inroads amongst French voters, although polls show she would still not make it to the final run-off. More political risk came from Germany where public approval for Merkel’s party – the CDU – fell behind that for the Social Democratic Party for the first time since she became Chancellor.

Price action was somewhat reversed this morning, as positive economic data from the Eurozone gave risk a boost and pushed bond prices lower. The Eurozone composite PMI rose to an almost six-year high in February, providing more fodder to those who claim that the European recovery is becoming more broad-based. More importantly, the data suggests a continued upturn in prices which – if formally acknowledged by the ECB – could cause some bond-market turmoil.

Greece is once again at a deadlock with its creditors

But if you’re wanting for more political risk, look no further, the Eurozone has you covered. Greece is once again at a deadlock with its creditors, and with no further aid ‘unlocked’ before yesterday’s ‘soft’ finance-ministers-meeting-cum-deadline, it looks like at least another couple of months before any progress can be registered. Will we really be going there again?

This article was issued by Andrew Martinelli, 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.