Markets Summary and OPEC | Calamatta Cuschieri

Simonds Farsons Cisk plc rose to an all-time high by 4.8% to a €11.00 price level. Similarly happened to Malta International Airport plc, with an increase of 4% to reach a €7.80 level. Both RS2 Software plc and Bank of Valletta plc regained momentum with an increase of 0.5%, €1.91 and 0.9%, €1.15 respectively.  Medserv plc reached the highest price point since early 2018 which resulted to a 1.6% increase and a price of €1.25. On the other hand, Plaza Centres plc decrease by 1% to a price of €1.02. Lombard Bank also closed its trading day in the red with a decrease of 3.6% to a price of €2.12.

European Stocks and ECB Stimulus

The bond markets’ main event was the European Central Bank’s monetary policy meeting. In this meeting the ECB announced a cut in it deposit facility by another 10 basis points to reach a record low of -0.5% from a previous level of -0.4%. The ECB expects that their key interest rates remain unchanged or move to lower levels until inflation outlook is close, but below 2%. The ECB will resume it Asset Purchase Programme on a monthly basis of €20 billion starting from the 1st of November. This programme does not have an end date, it will keep going until policy rates are reinforced. Lastly, the ECB introduced a two-tier system to reserve remuneration, this means that part of the banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate.

European stocks traded higher, with banks underwhelmed by the ECB’s stimulus measures and Washington’s decision to delay trade tariffs resulted in a boost in automakers and technology firms. The pan-European stocks index increased by 0.8% after the ECB’s meeting. The ECB’s announcements initially sent bond yield tumbling together with the euro but the euro zone stocks were in positive territory. Anheuser-Busch InBev gave the biggest boost in the STOXX 600 index after the company announced that it will explore again an initial public offering in Hong Kong for its Asia Pacific unit two months after cancelling the planned listing.

Saudi Arabia – OPEC Cuts to be considered in December

Saudi Arabia’s newly appointed energy minister, Prince Abdulaziz bin Salman said that OPEC and non-OPEC partners would consider deeper production cuts at its next full meeting. His comments came just in time when OPEC and non-OPEC partners are struggling to increase crude futures this year. This has raised questions with regards to the group, which is made up of the world’s most powerful oil-producing nations, really is of influence over the oil markets. The full committee will have its next meeting in Vienna, Austria in early December to discuss whether further action is needed to stabilise oil markets in 2020. Russian Energy Minister Alexander Novak stressed it was of the outmost importance for all members signed up to the declaration of production cuts to reach full compliance.

The energy minister also mentioned in the meeting that he is unaffected by the President Donald Trump’s tweets about OPEC and the oil market. Previously, the President has used Twitter as a platform to express his disdain for the 14-members of the OPEC organisation, with regards to cutting plans that resulted in a boost in priced amid a high supply and low demand environment. In mid-June, OPEC and non-OPEC allies, agreed to extend their output cuts into 2020, Trump tweeted: “Oil prices are too high, OPEC is at it again. Not good!” as a response to the group’s decision. Lower oil prices translate to more affordable gas prices for American consumers, something the president wants to ensure ahead of an election year.
 

This article was issued by Peter Petrov, Junior Trader at Calamatta Cuschieri. For more information visit, https://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.