UK markets dipped sharply on Friday, with the FTSE 100 index declining for the sixth consecutive session, as banks, miners and oil producers recorded losses.
Banks, Lloyds Banking Group, HSBC and Standard Chartered, lost between 1.7% and 6.1%, as risk aversion increased among investors, while Royal Bank of Scotland slipped 6.9%, after the company posted a wider-than-expected first-half loss of £1.4 billion.
Miners, Rio Tinto, Kazakhmys and Antofagasta, declined between 2.1% and 4.6%, in line with a fall in base metal prices.
Oil producers, Tullow Oil, Royal Dutch Shell and Essar Energy, lost between 1.0% and 5.8%, amid worries over future oil demand, while BP shed 2.3%, after the company began talks with Transocean over the 2010 Gulf of Mexico oil spill.
FTSE 100 dropped 2.7% or 146.2 points to 5,247.0. FTSE 250 fell 2.4% or 257.5 points to 10,313.1.
European Trading Review
European markets ended lower on Friday, as growing concerns about sovereign debt issues and fears that the US might slip back into recession, overshadowed better-than-expected US jobs data report. Moreover, an unexpected drop in German industrial production further weighed on market sentiments.
Insurer, Allianz, dropped 4.4%, after the company reported second quarter profit that missed market estimates.
Automakers, Daimler and Volkswagen, declined 4.3% and 4.5%, respectively, amid concerns that demand for automobiles might slump.
Steelmaker, ThyssenKrupp, fell 3.9%, tracking a decline in base metal prices.
Guarding-services provider, Securitas, plunged 11.0%, after the company reported a drop in its second-quarter net income.
FTSEurofirst 300 index declined 1.8% to 975.0. German DAX Xetra 30 slumped 2.8% to 6,236.2. French CAC-40 fell 1.3% to 3,278.6.
US Trading Review
US markets ended mixed on Friday, as stronger-than-expected July jobs report and signs of progress in resolving Europe’s debt crisis offset pessimism about the state of global economy and speculation of a likely S&P downgrade of US debt.
Among financial stocks, Bank of America slipped 7.5%, as Walls Fargo downgraded the stock to ‘Market perform’ from ‘Out-perform’.
Citigroup dropped 3.9%, after it was subpoenaed by the California Attorney General’s Office for a trial of mortgage securitisation policies.
US stocks pared losses as Italian Prime Minister, Silvio Berlusconi, promised to implement austerity measures at a faster-than-expected rate.
DJIA rose 0.5% to 11,444.6. NASDAQ slid 0.9% to 2,532.4. S&P 500 slipped 0.1% or 0.7 points to 1,199.4.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.6411, 0.2% lower against the EUR at €1.1455 and 0.2% down against the JPY at ¥128.2.
The EUR is trading 0.3% higher against the USD at $1.4325, as Italy and Spain’s efforts to implement austerity measures were praised by the European Central Bank which promised to “actively implement” their bond-purchase program.
The EUR is trading 0.1% lower against the JPY at ¥111.91, as Asian markets traded lower, decreasing the demand for the high yielding assets.
The USD is trading 0.4% lower against the JPY, as Standard & Poor’s downgrade of the US’s long-term credit rating spurred demand for the safe assets. G7 nations pledged to support financial stability and growth, adding that they would intervene in currency markets to curb excessive volatility.
On Friday, the EUR ended higher against major currencies, amid news that the European Central Bank may start buying Italian bonds.
Commodities Trading Review
In Asia, crude oil for September delivery is trading $2.89 lower at $83.99 per barrel.
On Friday, crude oil for September delivery closed 0.3% or 25 cents higher at $86.88 per barrel, as a higher-than-anticipated US jobs report increased expectations that the future fuel demand would not be affected.
Gold for immediate delivery is trading 2.0% higher today, at $1696.34 per ounce, as a downgrade of the US credit rating spurred demand in the precious metal as a hedge against fiscal mismanagement of the US Government.
Gold prices for December delivery declined 0.4% or $7.20 to $1,651.80 per ounce on Friday, as a better-than-expected US jobs report dimmed the demand for the precious metal as a safe haven asset.
Financial Trading News
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'Crude Oil Gains After US Employment Report Raises Demand Expectations' edited by ETX Capital, updated 08-Aug-11
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