UK markets closed higher yesterday, led by a rally in banks, as US manufacturing unexpectedly increased in August and initial jobless claims fell last week, easing concerns about the global economy recovery.
Banking stocks, Royal Bank of Scotland Group, Lloyds Banking Group and Barclays, soared between 5.6% and 8.2%, after the Financial Times reported that the UK government would avoid any reform of the banking sector until after the next election.
Wealth manager, Hargreaves Lansdown, surged 18.0%, after the company reported a rise in its full-year earnings.
Charter International climbed 4.7%, amid takeover speculation by Melrose.
Oil stocks, Tullow oil and Royal Dutch Shell gained 3.2% and 0.5% respectively, in line with a rise in crude oil prices.
Gains for the FTSE 100 were restricted by losses in miners.
FTSE 100 advanced 0.5% to 5,418.7. FTSE 250 rose 0.5 % to 10,576.8.
European Trading Review
European markets ended mixed yesterday, as a drop in new export orders in China and a decline in Eurozone manufacturing activity, increased concerns about global economic growth, overshadowing stronger-than-expected US manufacturing data.
Media group, Lagardere, dropped 11.1%, after the company forecasted lower-than-expected profit for the full year.
Construction firm, Eiffage, slumped 17.6%, after the group reported a 39% decline in first-half profit.
L’Oreal slipped 0.4%, after Bank of America Merrill Lynch downgraded the stock to “Neutral” from “Buy”.
Nokia rose 5.2%, after Canada’s Mosaid Technologies acquired a portfolio of about 2,000 patents and patent applications originally filed by Nokia for an undisclosed sum.
Societe Generale rose 1.6%, after Exane BNP Paribas upgraded the stock to “Outperform” from “Neutral”.
FTSEurofirst 300 index rose 0.7% to 973.4. German DAX Xetra 30 fell 0.9% to 5,730.6. French CAC 40 rose 0.3% to 3,265.8.
US Trading Review
US markets retreated yesterday, snapping their four-days winning streak, as investors remained concerned ahead of the government's monthly jobs report, overshadowing better-than-expected reading on manufacturing sector.
Among financial stocks, Bank of America, Morgan Stanley and Goldman Sachs declined between 3.2% and 3.5%, after the Federal Reserve announced an enforcement action against Goldman Sachs Group over its mortgage and foreclosure practices.
Automakers, Ford and General Motors, skidded 2.4% and 4.2%, respectively, as they reported lower-than-expected monthly US auto sales.
Retailers, Saks, Gap and Stage Stores, slumped between 1.9% and 10.9%, after their like-to-like sales missed market expectations.
Defence contractor, SAIC tumbled 13.5%, after its second-quarter profit fell 6.3%.
Dow Jones shed 1.0% to 11,493.6. NASDAQ slid 1.3% to 2,546.0. S&P 500 slipped 1.2% to end at 1,204.4.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.1% lower against the USD at $1.6182, marginally lower against the EUR at €1.1345, and 0.1% lower against the JPY at ¥124.39.
The EUR is trading marginally lower against the USD at $1.4262, amid speculation that a German report due next week would show a fall in factory orders for the first time since March. The EUR is also trading lower against most of its major currencies ahead of the European Central Bank policy meeting, scheduled next week.
The EUR is trading marginally lower against the JPY ¥119.64, as Asian equity markets declined and amid reports that the US would sue banks over their mortgage and foreclosure practices, boosting demand for safe haven assets.
The AUD is trading higher against the USD, amid speculation that Australia’s Reserve Bank would not cut interest rates.
Yesterday, the USD closed higher against major currencies, as higher-than-expected data on US manufacturing and an unexpected fall in initial jobless claims, increased investors confidence in the economy.
The USD ended higher against the EUR, after data showed that German manufacturing activity increased less-than-expected in August and French manufacturing activity contracted for the first time since July 2009.
The SEK ended lower against the USD, after a report showed that manufacturing activity shrank for the first time in two years, reducing demand for the country’s currency.
The CAD closed higher against the USD, amid optimism that future trade with US would increase, US manufacturing activity rose unexpectedly in the August.
Commodities Trading Review
In Asia, crude oil for October delivery is trading 0.3 % lower at $88.65 per barrel.
Yesterday, crude oil for October delivery rose 0.1% or $0.12 to settle at $88.93 per barrel, amid expectation of increase in energy demand, after US manufacturing activity and Chinese official Purchasing managers’ index rose in August compared to July.
Crude oil closed higher yesterday amid worries over a tropical storm developing in the Gulf of Mexico.
Gold for immediate delivery is trading 0.1% higher today, at $1,828.35 per ounce.
Gold for December delivery declined 0.1% or $2.60 to end at $1,829.10 per ounce yesterday, as the dollar rose against the major currencies, decreasing the demand for the precious metal as a hedge against inflation.
Financial Trading News
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'Rising Crude Oil Prices Boost Royal Dutch Shell Stocks' edited by ETX Capital, updated 02-Sep-11
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