Markets caught in limbo | Calamatta Cuschieri

World stocks held near record highs on Thursday, after minutes of the latest US Federal Reserve meeting showed policymakers are in no rush to raise interest rates. Europe was mostly in the red by afternoon trade, as investors sifted through earnings reports and assessed the mixed tone on US interest rates from the Federal Reserve. American stocks seesawed between small gains and losses, getting a help from a rally in oil prices.

Fed

The Fed minutes released overnight showed many policy makers believed it may be appropriate to raise interest rates “fairy soon”, if jobs and inflation data met expectations. But they also highlighted deep uncertainty over President Donald Trump’s economic programme.

This helped support many economists and traders view that a March rate hike is beginning to look unlikely. However, “a scenario where US economic data repeatedly exceeds expectation… could prompt the central bank to surprise markets by taking action in May”.

While the Fed is on the path of raising interest rates, the European Central Bank has left rates at ultralow levels, and is buying €60 billion a month of government bonds throughout the Eurozone.

Oil rallies

Gains on Thursday came as oil prices rallied and helped lift shares of US energy giants. Crude oil was up 1.6% at $54.45 a barrel, rebounding after posted losses on Wednesdays. Recent data from the American Petroleum Institute showed a 884,000-barrel decline in US crude supplies last week, a positive sign for demand.

Shares of Exon Mobil, Chesapeake Energy and Marathon Oil were in the green.

The strugglers

On a more downbeat note, shares of L Brands Inc tumbled on Thursday after the Victoria’s Secret parent company issued weaker than forecast guidance for 2017. Shares sank 17% on this news.

Banking shares also struggled. Barclays reported worse than expected net profits for 2016, despite posting a surprise uptick in its capital buffers as it nears the end of a major restructuring program. Shares of the UK based lender were down 3%.

Elsewhere, in the automobile industry, shares of Tesla were trading in negative territory, after the electric car maker reported a wider than expected quarterly loss on Wednesday. Shares moved 6% lower.

Peugeot resumes dividend

French carmaker Peugeot, who is in advanced talks to buy the European operations of General Motors Co, will pay its first dividend since 2010, showing signs of strong resurgence and renewed confidence when one considers that the company was on the brink of financial collapse just four years ago.

In its full year results on Thursday, Peugeot said it would make a pay out of €0.48 a share, equivalent to a total dividend payment of €430 million. The company reported a staggering 79% rise in net profit to €2.15 billion from the year before.

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.