UK markets closed lower yesterday, as investors awaited key interest rate decision and further signs of quantitative easing from the Federal Reserve.
Banks, Barclays, RBS and Lloyds, declined between 0.7% and 2.5%. This came as HSBC downgraded the three banks to “Neutral” from “Overweight”, citing costs worth £10 billion, following the UK government support to the ring-fencing proposal by the Independent Commission on Banking.
Oil producers, Petrofac, Essar Energy and Tullow Oil, fell between 1.3% and 1.4%, despite a rise in oil prices.
Losses were restricted for the FTSE index as bid speculation spurred gains in Man Group, J Sainsbury and Centrica, while shares of SDL and Restaurant Group benefited from broker upgrades.
FTSE 100 fell marginally to 5,773.0. FTSE 250 dipped 0.2% or 18.8 points to 11,636.2.
European Trading Review
European markets ended lower yesterday, as investors speculated over Greece’s bailout prospects and amid concerns over the global economic recovery. Investors also remained cautious, ahead of a US Federal Reserve meeting.
Electronics major, Philips electronics, plunged 8.8%, after the company warned that second-quarter profit at its lighting and consumer lifestyle divisions would come in much lower-than-expected.
Siemens fell 0.8%, after its peer, Philips, stated that Western Europe consumer market and construction in mature markets would remain weaker-than-expected.
Among retailers, Hennes & Mauritz slipped 2.3%, after the company reported a decline in its first-half profit, while Carrefour lost 0.5%, after Moody’s Investors Service cut its short-term credit rating to ‘Negative’ from ‘Stable’.
Pharmaceutical company, Merck declined 2.8%, after it ceased development of a multiple sclerosis pill.
FTSEurofirst 300 index declined 0.5% to close at 1,091.5. German DAX Xetra 30 lost 0.1% or 7.3 points to 7,278.2. French CAC-40 fell 0.2% or 5.7 points to settle at 3,871.4.
US Trading Review
US markets fell yesterday, with the DJIA and S&P 500 snapping a four-day winning streak, as the US Federal Reserve slashed its forecast for economic growth for 2011 and next year, without signalling further programme for new stimulus.
Energy stocks, EOG Resources and ExxonMobil lost 0.8% and 0.9%, respectively, amid weak prospects for oil demand, following Bernanke’s downbeat forecast of economy.
Financial stocks, Janus Capital Group and Federated Investors lost values, as risk appetite deteriorated among investors.
Among technology stocks, Adobe Systems plunged 6.3%, as it lowered its third-quarter earnings forecast.
US listed shares of Philips Electronics plummeted 10.3%, as it lowered its profit forecast for its lighting and toasters-to-shavers consumer electronics divisions, citing weak demand in Europe.
Research In Motion dipped 0.5%, after UBS removed the stock from its top tech picks.
DJIA edged down 0.7% to 12,109.7. NASDAQ slipped 0.7% to 2,669.2. S&P 500 lost 0.6% to 1,287.1.
Forex Trading Review
At 0400 BST today, the GBP is trading marginally lower against the USD at $1.6044, 0.1% higher against the EUR at €1.1212 and 0.2% up against the JPY at ¥129.198.
The EUR is trading 0.1% lower against the USD at $1.4310, as investors nervously awaited the outcome of a two-day meeting of European leaders in Brussels to consider Greece’s financing needs.
The EUR is trading 0.1% higher against the JPY at ¥115.24.
Yesterday, the GBP ended lower against major currencies, after minutes from the recent meeting of Bank of England revealed that a higher number of policy makers voted to keep interest rates at a record low.
The USD gained against the EUR and GBP, as Federal Reserve Chairman, Ben Bernanke, stressed on worries about US recovery and Eurozone debt, spurring investors to purchase the US currency as a safe haven asset.
Commodities Trading Review
In Asia, Nymex crude oil for August delivery is trading $1.28 lower at $94.13 per barrel.
Yesterday, crude oil for August delivery closed 1.3% or $1.24 higher at $95.41 per barrel, as the Energy Information Administration reported a higher-than-expected decline of 1.7 million barrels in US crude oil supplies during the week ended 17 June.
Gold for immediate delivery is trading 0.1% lower today, at $1546.7 per ounce.
Gold prices for August delivery gained 0.5% or $7.00 to $1,553.40 per ounce yesterday, as the Federal Reserve’s concerns about US economic growth kept investors interested in the precious metal as a safe haven asset.
Financial Trading News
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'Weaker Prospects for Crude Oil Demand Drag ExxonMobil Stocks Lower' edited by ETX Capital, updated 23-Jun-11
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