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Markets Summary and Airbus Shares

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The MSE Equity Price Index continued its downward trend for the second day as it fell another 0.35%. BMIT Technologies dropped by 1.9% which resulted to a €0.52 price level. HSBC Bank Malta plc experienced it new low for 2019 by a 3.4% decrease which lead to €1.42. Trident Estates plc had a fall in price by 4.9%, €1.76, tomorrow the company is scheduled to publish interim results. The only positive performing share for the day was Bank of Valletta plc which rose by 0.9% to regain the €1.15 price level.

European Stocks diminish after Saudi attack

Oil and gas companies were the main protagonist in a gloomy session for the European stock markets. This was a result of an attack on Saudi Arabia’s oil facilities which lead to crude prices higher, while increasing geopolitical unrest among investors. Other major European sectoral indexes fell, with shares in Airbus taking the lead together with French luxury goods exporters also going for the downfall as the E.U. realises that it may also face U.S. tariffs in a long overdue dispute over aircraft subsidies.

The pan-European STOXX 600 index decreased by 0.6%, ending a winning streak and trade-sensitive German shares forming part of the DAX fell by 0.7%. Shares forming part of the Italian infrastructure group Atlantia continued their downward trend by another 8% after Italy’s tax police reported evidence that safety reports for some viaducts operated by Atlantia’s motorway unit had been falsified or had omitted information.

Airbus fall in share price

A number of major European firms had a decrease in share price after reports the World Trade Organisation has granted President Trump the right to charge billions of dollars in tariffs on EU imports. If the WTO confirms its decision it would mean that the U.S. should be compensated for what is argues as illegal subsidies taken advantage by the European plane maker Airbus.

Following the reports, Airbus shares started trading lower by 3.65%. Earlier this year, U.S. officials published a list of European products which it said will select from in an attempt to recoup the $11 billion. Forming part of the list were sectors like aircraft and parts, motorcycles, food, drink, clothes, base metal parts and jewellery equipment. This news also had a negative effect on French luxury group LVMH which resulted in a fall of 2.6% in the stock price.

Federal Reserve upcoming meeting

Due to the sudden increase in energy prices it helped add to sentiment that the Fed suddenly might not be in a hurry to cut interest rates. The markets are still expecting the central bank to lower its benchmark overnight lending rate by a quarter point at this week’s Federal Open Market Committee meeting. Traders which form part of the Fed fund futures market priced in a 34% chance that the Fed will leave rates unchanged.

This came amid some changes in economic trends as well as inflation pressures caused by a 14% jump in oil prices. An increase in inflation makes the Fed more likely to tighten policy or at least leave them unchanged rather than to cut rates. Recent strong economic data featured an increase in consumer and business confidence as well as retail sales. Some halting signs of easing tensions in the U.S.-China tariff battle also contributed. Other halting signs are the firming inflation trend, such as the 2.4% annual rise in consumer prices, plus the likely boost from oil prices, all this would led Fed Chairman Jerome Powell to reiterate his position that this is a mid-cycle adjustment and not part of a longer easing trend.

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.