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Markets in the Green but Pound and Xiaomi Slide

06744 CC Trader Talk V2

Markets Roundup

Markets in Europe closed in the green as investors focused on the latest Brexit-related tensions in the United Kingdom. UK Brexit Secretary David Davis and Foreign Secretary Boris Johnson resigned from their positions, refusing to support Prime Minister Theresa May’s soft-Brexit strategy unveiled at the government’s Chequers meeting on Friday. Meanwhile, May insisted her Brexit proposal is in the "national interest."

The FTSE 100 climbed 0.92%. The largest gains were recorded in the mining sector as Antofagasta jumped 3.39%, followed by BHP Billiton, up 2.64%. The DAX rose 0.38%. The best performer was Lufthansa whose shares surged 2.24%. The CAC 40 added 0.42% with Valeo increasing 2.73%.

Pound slides after May speaks in Parliament

The British pound traded near the session lows against the United States dollar after United Kingdom Prime Minister Theresa May delivered remarks in the Parliament regarding the Brexit deal. May stated that the divorce proposal "is a matter of national interest" despite calling it "ambitious."

No Rate Hikes before summer 2019

European Central Bank (ECB) President Mario Draghi reiterated that the bank will not raise interest rates in the next twelve months and is ready to keep them at the current levels "as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path."

Draghi added that the ECB expects to end quantitative easing at the end of the year and stressed the decision is "subject to incoming data confirming our medium-term inflation outlook."

In a speech to the European Parliament, Draghi also warned that the "increased protectionism" and the ongoing trade tensions pose the biggest risk to the outlook. He called on the European Union to remain "strong and united" and to "lend support to multilateralism and global trade" in order to protect its citizens from "unchecked globalization."

Xiaomi drops in IPO, recuperates most of loss

Xiaomi Corp. declined as much as 5.88%, in the first hour of its stock market debut in Hong Kong, before recuperating most of the loss. The company led by founder, chairman and chief executive Lei Jun dipped to HK$16 per share compared to the pricing of the initial public offering at HK$17, also the later session high.

The consumer electronics giant raised HK$36.9 billion ($4.7 billion), equivalent to a valuation of $54 billion or almost two times less than the target determined at the start of the process. Still, the IPO was the largest for a Chinese company since Alibaba’s, which occurred in 2014. Excluding expenses, Xiaomi took home HK$24 billion.

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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