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Trader Talk: An Analysis of the Markets

U.S. stocks ended the session slightly lower on Tuesday, with the Dow Jones and the S&P 500 taking a step back from Monday’s record closing levels as traders found no reason to buy further into the market after a good run of gains. Most of the primary S&P sector indexes ended the session at lower levels, led by telecom, which fell by 1%. Monday had marked the Dow’s second straight record closing high, while it was the third consecutive record close for the S&P 500 index. However, recent advances were made on light volume of trades, indicating that the rally had lacked conviction. Yesterday, the Dow Jones industrial average fell 21.29 points or 0.13 percent, to end at 16,722.34. The S&P 500 fell by 0.73 a 0.04% drop, to 1,924.24. The Nasdaq Composite dropped 3.12 points or 0.07% to 4,234.08 whilst Google Inc fell 1.7% percent to $544.51. Meanwhile, U.S. Treasuries yields rose to their highest in three weeks with benchmark 10-year Treasury notes yielding 2.6%.

Across the Atlantic, German bund yields spiked after euro zone inflation proved in line with revised expectations, prompting a number of investors to take profits after the recent rally. German 10-year yields, the benchmark for euro zone borrowing, rose to 1.36% percent. According to a number of European Central Bank officials the ECB president is likely to point out that any interest-rate cut won’t necessarily be the final one. Mr. Draghi is expected to confirm his commitment to keep borrowing costs at current levels or even lower. Debates are ongoing on whether a cut of 10 or 15 basis points in both the benchmark and deposit rates should be sought, with a final decision expected to be made in tomorrow’s MPC meeting.

Asian stocks finished mixed yesterday following key Chinese economic data and monetary policy decisions in Australia and India. In China, HSBC’s PMI (Purchasing Manager Index) index for May came hit the 49.4, level, down from a preliminary reading of 49.7, but higher than April’s 48.1 figure. Meanwhile, activity in the country’s services sector rose to a six-month high in May.

On the local front, yesterday’s session saw the MSE index ending the day at higher levels, reaching 3,396. This rise was motivated by the increase in prices of a number of shares including HSBC, MaltaPost, RS2, MIA and BOV. RS2 Software ended the session 1.2% higher with nine trades totalling 57,611 shares, MaltaPost share price rose by 2.7%, ending the session at €1.15. BOV ended the session 1.4% higher at €2.14.HSBC ended the session 0.5% higher at the price of €2.11 on volumes of 9,620 shares. MIA rose 0.4% to €2.26 on volumes of 600 shares. IHI dropped 1%, ending the session at €0.79 with 1,000 shares changing shares through one trade. Lombard ended the session at the price of €1.45. Loqus Holdings ended the session at €0.105 with 1,000 shares changing hands through one trade.

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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