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Friday recap

It was a positive Friday for the European markets as they closed significantly higher with financials leading the gains as investors focused on political developments in Italy and Spain. Giuseppe Conte was sworn in as the Italian prime minister who will lead the country's new populist coalition government. Meanwhile, Spanish Prime Minister Mariano Rajoy was ousted in a parliamentary vote and is set to be replaced by Socialist Workers' Party leader Pedro Sanchez, who led the no-confidence motion as a result of corruption allegations against Rajoy's Popular Party.

Italy's FTSE MIB surged 1.49% as banks pushed the index higher. Banco BPM rocketed 8.45% and BPER Banca soared 7.87%. Ubi Banca, Banca Generali and Unicredit also ended the session with sharp gains.

In Spain, the IBEX 35 closed 1.56% in the green. Acerinox climbed 3.56%, while banks including Banco Santander and Banco de Sabadell added about 3%. The FTSE 100 added 0.31%. Chemicals firm Johnson Matthey led the gains, increasing 3.42%, while mining companies also recorded strong performances. The CAC 40 gained 1.19% as Schneider Electric and Credit Agricole added 3% and the DAX rose 0.95% with Commerzbank jumped 4.83%.

Toshiba closes a deal

Toshiba Corp. announced that all conditions for the sale of Toshiba Memory Corp. were met and the $18 billion transaction was completed. The company's chip unit will be sold to K.K. Pangea, a special purpose company controlled by a consortium led by Bain Capital. Toshiba initially failed to get regulatory approval in March, but received it earlier this month.

According to the statement, the Japanese conglomerate also said it will reinvest ¥350.5 billion in Pangea. Around ¥109.6 will be invested in common stock and ¥240.9 in preferred stock, giving Toshiba a 40.2% stake in the company.

The week ahead

Surveys on the services sector will be mulled over next week, with Chinese trade numbers important for commodities sentiment but pretty quiet on the companies’ front.

Italy will remain a concern for investors, despite the encouraging news that a government has been formed. The Italian government has certain issues which Brussels are not fond of, especially in terms of immigration and budget policy. Therefore markets may not really switch into the risk-on mode, also keeping in mind the rising tensions between the US and EU.

With tariff wars, Deutsche Bank and Italy/Spain headlines dominating, there is a sense that the usual round of economic data will be something of a sideshow this week. 

Disclaimer:

This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view 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.