UK markets rallied yesterday, as positive company updates coupled with mounting expectations of a resolution to the Greek debt crisis improved the risk appetite among investors.
Miners, BHP Billiton, Rio Tinto and Xstrata, gained between 2.2% and 3.0%, as base metal prices increased.
Precious metal miners, Fresnillo, Randgold Resources and Lonmin, rose between 3.0% and 4.7%, as silver, gold and platinum prices climbed.
Oil producers, Royal Dutch Shell, BP and Petrofac, added between 2.3% and 3.8%, as oil prices edged up.
Better-than-expected second quarter earnings and upbeat trading update lifted the shares of Carnival and Whitbread respectively, while Cable & Wireless Communications and Wolseley benefited from broker upgrades.
FTSE 100 gained 1.4% to 5,775.3. FTSE 250 added 1.0% to 11,654.9.
European Trading Review
European markets finished higher yesterday, on hopes that Greek Prime Minister, George Papandreou, would win a confidence vote in his government and enable the passage of new austerity measures, making Greece eligible to receive the financial aid.
Markets shrugged off data revealing a larger-than-expected decline in the ZEW indicator of German economic sentiment. Bank, Commerzbank soared 4.9%, after Deutsche Bank resumed coverage of the stock with a ‘Buy’ rating.
Retailer, Metro, climbed 1.7%, after Nomura Holdings upgraded the stock to ‘Buy’ from ‘Neutral’.
Software jumped 4.5%, after UBS upgraded the stock to ‘Buy’ from ‘Neutral’, citing benefit to the company due to rising demand in Europe.
Steelmaker, ThyssenKrupp advanced 2.9%, tracking a rise in base metal prices.
Mobile handset maker, Nokia, rose 3.9%, after the company unveiled its new N9 smartphone in Asia.
FTSEurofirst 300 index rose 1.4% to close at 1,096.5. German DAX Xetra 30 gained 1.9% or 135.3 points to 7,285.5. French CAC-40 advanced 2.0% or 77.4 points to settle at 3,877.1.
US Trading Review
US markets finished higher yesterday, as investor speculated that Greece government would be able to avoid debt default.
Financial stocks, JP Morgan, American Express and Bank of America posted gains between 1.1% and 2.1%, as risk appetite increased among investors.
Chubb Corp and Discover Financial Services added 0.8% and 1.8%, respectively, as the former quantified its losses from natural disasters and Macquarie Group raised its rating on the latter to ‘Outperform’ from ‘Neutral’.
Homebuilders, Toll Brothers and Pulte Group, advanced 1.4% and 2.3%, respectively, as US existing home sales declined less-than-expected in May.
Food-retailer, WholeFoods jumped 6.2%, as BMO Capital Markets upgraded the stock to ‘Outperform’.
DJIA edged up 0.9% to 12,190.0. NASDAQ advanced 2.2% to 2,687.3. S&P 500 gained 1.3% to 1,295.5.
Forex Trading Review
At 0400 BST today, the GBP is trading marginally lower against the USD at $1.6212, slightly weaker against the EUR at €1.1281 and 0.1% lower against the JPY at ¥130.10.
The EUR is trading marginally lower against the USD at $1.4371, on concerns that Greek Prime Minister, George Papandreou, would find it difficult to pass an austerity package even after winning a confidence vote.
The EUR is trading 0.1% lower against the JPY at ¥115.32.
Yesterday, the GBP slipped against most of the major currencies, as Bank of England Markets Director, Paul Fisher, kept the option of additional stimulus measures open.
The EUR rose against the USD, after Greece’s Finance Minister called for an early approval to Greece’s latest austerity plan.
Commodities Trading Review
In Asia, crude oil for August delivery is trading 47 cents lower at $93.70 per barrel.
Yesterday, crude oil for July delivery expired 0.2% or 14 cents higher at $93.40 per barrel, as a weak dollar increased the demand for commodities as an alternative investment. Gains for crude oil were muted, however, amid uncertainty over Greece’s debt situation and the expiration of the July crude contract.
Crude oil for August delivery rose 0.6% or 54 cents to $94.17 per barrel.
Gold for immediate delivery is trading 0.1% lower today, at $1546.7 per ounce.
Gold prices for August delivery gained 0.3% or $4.40 to $1,546.40 per ounce yesterday, as persisting lack of clarity about Greece’s sovereign-debt crisis increased the demand for the precious metal as a safe haven asset.
Financial Trading News
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'Gold Prices Rise as Greek Sovereign Debt Crisis Encourages Safe Haven Buying' edited by ETX Capital, updated 22-Jun-11
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