UK markets extended their gains for the third consecutive day, bolstered by banking sector stocks, after the European Central Bank announced the infusion of dollar liquidity in the region.
Among financial stocks, Lloyds Banking Group, the top gainer on the FTSE 100 index, surged 7.2%, while HSBC Holdings, Barclays and Royal Bank of Scotland gained between 3.9% and 4.0%, as worries over the banking sector eased. Additionally, a bullish note on the banking sector by Nomura helped in the surge.
Retailers, Kingfisher and Burberry rallied 4.8% and 6.6%, respectively, as the former reported a 28% increase in first-half net profit. The latter received a boost following news that China might cut taxes on the luxury-goods sector by year end.
Engineering group, GKN rose 6.1%, after Evolution Securities reiterated its “Buy” rating on the stock.
FTSE 100 surged 2.1% to 5,337.5, while FTSE 250 soared 2.1% to 10,324.1.
European Trading Review
European markets ended sharply higher yesterday, after Germany and France reaffirmed that Greece would remain a member of the Eurozone, and as global central banks announced stimulus measures to ease monetary tightening conditions in Europe.
Banking stocks, BNP Paribas, Credit Agricole and Deutsche Bank, rallied between 5.8% and 13.0%, after the European Central Bank (ECB) stated that it would coordinate with other global central banks to lend the US currency to European banks.
Luxury-goods makers, LVMH, Hugo Boss and Richemont, added between 1.2% and 4.7%, following a report that China might cut tariff on clothes and leather goods by the end of the year.
ArcelorMittal rose 4.3%, after Citigroup upgraded the stock to “Buy” from “Hold”.
Banking stock, UBS, tumbled 11.0%, after it announced a $2.0 billion trading loss.
FTSEurofirst 300 index advanced 2.1% to 932.2. German DAX Xetra 30 rallied 3.2% to 5,508.2. French CAC-40 added 3.3% to 3,045.6.
US Trading Review
US markets rallied yesterday, extending their gains for the fourth consecutive session, as the ECB announced syndicated central bank action to infuse dollar liquidity in the European financial system offsetting a dismal reading of US weekly jobless claims.
JPMorgan Chase and Bank of America climbed 3.1% and 4.0%, respectively, as worries over the situation in Europe eased.
Insurer, Lincoln National Corp, the top gainer on the S&P 500 index, surged 8.2%, after its second-quarter operating profit surpassed market expectations.
Transcept Pharmaceuticals, the top gainer on NASDAQ, surged 79.6%, following news that the company would not have to conduct more trials before resubmitting a marketing application for its insomnia drug.
DJIA rose 1.7% to 11,433.2. NASDAQ rose 1.3% to 2,607.1. S&P 500 gained 1.7% to 1,209.1.
Forex Trading Review
At 0400 BST today, the GBP is trading marginally higher against the USD at $1.5799, trading 0.2% higher against the EUR at €1.1402, and 0.1% higher against the JPY at ¥121.31.
The EUR is trading 0.2% lower against the USD at $1.3857.
The EUR is trading 0.1% lower against the JPY at ¥105.35.
The USD is trading higher against the most of the major currencies, amid speculation that consumer confidence in the US might rebound from its lowest level in more than two years, shrugging off fears that the US economy was slowing down.
The AUD traded lower against the JPY, amid speculation that policy makers would cut interest rates this year, ahead of the release of the Australian Reserve Bank’s minutes next week.
The NZD traded lower against the JPY, following a private report that showed consumer confidence data in New Zealand declined in September, and as the Reserve Bank of New Zealand left interest rates at a record low yesterday.
Yesterday, the EUR ended higher against the USD, after the European Central Bank announced to provide dollar loans to Eurozone banks, easing concerns about credit crunch in the region.
The CAD closed higher against the USD, on hopes that global economy would recover, after announcement from ECB.
The USD appreciated against the JPY, as Asian equity markets closed higher, curbing demand for safer assets.
Commodities Trading Review
In Asia, crude oil for October delivery is trading 0.4% higher at $89.8 per barrel.
Yesterday, crude oil for October delivery added 0.6% or $0.49 to settle at $89.40 per barrel. This came after the ECB announced to provide US dollar loans to banks in coordination with the US Federal Reserve, the Bank of England, Bank of Japan, and the Swiss National Bank, to avoid liquidity crunch in the Eurozone.
Crude oil gained values, amid expectation of increase in energy demand, after US industrial output rose 0.2% in August.
Gold for immediate delivery is trading 1.2% lower today, at $1,765.24 per ounce.
Gold for December delivery fell 2.5% or $45.10 to end at $1,781.40 per ounce yesterday. This came as demand for the safe haven asset waned amid speculation that the global economy is recovering, following report that US industrial output had risen in August.
Gold prices slumped as European leaders agreed to keep Greece as a member in the Eurozone, and after ECB announced measures to boost US dollar liquidity in the Eurozone.
Financial Trading News
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'Gold Weakens Amid Speculation of Global Economic Recovery' edited by ETX Capital, updated 16-Sep-11
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