UK markets ended lower yesterday, surrendering opening gains, amid investor caution over the ability of new governments in Italy and Greece to resolve the sovereign debt crisis.
Vedanta Resources, the top laggard on the FTSE 100 index, fell 3.6%, while Rio Tinto and Xstrata lost 1.3% and 1.8%, respectively, as EU industrial production fell 2.0% in September from August, and as metal prices fell.
Among banking sector stocks, Lloyds Banking Group, Royal Bank of Scotland and Barclays declined between 1.6% and 2.7%, amid worries over their exposure to European debt.
A downgrade at Goldman Sachs to “Sell” from “Neutral”, also hit Barclays.
Insurance groups, Prudential, Legal & General and Resolution slipped between 1.9% and 2.6%, amid concerns over their asset base.
FTSE 100 edged down 0.5% to end at 5,519.0. FTSE 250 inched 0.4%lower to settle at 10,347.8.
European Trading Review
European markets closed in the negative territory yesterday, on renewed concerns that European lawmakers would struggle to implement the reforms needed to resolve the sovereign debt crisis. This came after the Italian government sold €3 billion of bonds at the highest yield since 1997. Moreover poor corporate results dampened market sentiment further.
Financial sector stock, UniCredit, sank 6.2%, after it announced a €10.6 billion loss in its third-quarter.
Credit Suisse declined 1.1%, after Moody’s stated that it had put its credit rating under review for possible downgrade.
Construction related stock, Hochtief, tumbled 11.0%, after it stated that the global economic turmoil has delayed the sale of its airport-operating unit.
Solar panel makers, Q-Cells and Solarworld, plummeted 27.0% and 15.0%, respectively, after their third-quarter earnings fell short of market expectations.
FTSEurofirst 300 index declined 0.9% or 9.2 points to 975.5. German DAX Xetra 30 fell 1.2% or 72.0 points to end at 5,985.0. French CAC-40 dropped 1.3% or 40.4 points to settle at 3,109.0.
US Trading Review
US markets finished lower yesterday, amid investor worries over the Eurozone debt crisis, following a surge in Italian yields.
Bank of America, the top laggard on the DJIA index, retreated 2.6%. This came as concerns over the Eurozone debt crisis overshadowed its $1.8 billion post tax gain from the sale of 10.4 billion shares it held in China Construction Bank.
Retailer, J.C. Penney slipped 2.7%, after it posted a loss in the third quarter.
Bank of New York Mellon shed 4.5% and emerged as the top decliner on the S&P 500 index, after announcing that it would take a $100million charge in the current quarter from restructuring costs.
DJIA edged down 0.6% to 12,079.0. NASDAQ slid 0.8% to settle at 2,657.2. S&P 500 lost 1.0% to end at 1,251.8.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.1% lower against the USD at $1.5890, 0.1% higher against the EUR at €1.1674, and marginally higher against the JPY at ¥122.59.
The EUR is trading 0.1% lower against the USD at $1.3612.
The EUR is trading marginally lower against the JPY at ¥105.02.
The EUR is trading lower against the all of its major peers, ahead of a report that might show German investor confidence fell to a three-year low.
The AUD trimmed losses against the USD. This came after minutes of the recent meeting of the Reserve Bank of Australia revealed that the central bank may keep its borrowing costs unchanged to await the expansionary effects of high commodity prices and the resource investment boom.
Yesterday, the EUR / USD closed lower. This came as five-year Italian government bonds came at the highest cost for the government since 1997 and after Spain’s yields relative to Germany’s reached to a record high.
The GBP ended lower against the USD. This came after the CIPD reported that its index of UK hiring fell to -3 in the fourth-quarter from -1 in the third-quarter, adding that private sector would grow at a slower pace over the next three months.
Commodities Trading Review
In Asia, crude oil for December delivery is trading marginally lower at $98.11 per barrel.
Yesterday, crude for December delivery declined 0.9% or 85 cents to end at $98.14 per barrel. This came as the rise in dollar decreased the demand for the commodities as an alternative investment, and amid speculation that a slowdown in global economy would curb energy demand.
Gold for immediate delivery is trading 0.1% lower today, at $1,778.12 per ounce.
Gold for December delivery fell 0.5% or $9.70 to settle at $1,778.40 per ounce yesterday. This came as the dollar rose against the major currencies, dampening the demand for the precious metal as a hedge against inflation.
Gold lost value as investors took advantage of recent gains and preferred to book profits.
Financial Trading News
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'Gold Spreads Fall as Rising Dollar Dampens Inflation Hedge Demand' edited by ETX Capital, updated 15-Nov-11
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