Equities under pressure amid concerns over Portugal's largest bank

Thursday, July 10, 2014

European equity markets retreated sharply in today’s trading session as European issues hit and limited risk appetite. Portugal suspended trading in its Banco Espirito Santo shares (-19% at the time of the trading ban) following concerns about its economic strength as recent financial difficulties of the Bank seem to have “far-reaching implications”, according to Thomson Reuters.

PSI20 Index- Portugal Exchange Index

PSI20 Index (PSI 20 Index )  Dail 2014-07-10 17-16-53

The CAC, DAX, IBEX plunged between 1.2% and 2%, while the London benchmark index fell slightly less than its contenders by 0.63%.

The Bank of England kept interest rates unchanged at 0.5% in July, in line with expectations. Sterling continued its strong upside momentum against the euro, trading near 1.26, while it managed to hold above 1.71 against the USD despite a small correction lower within the range of 1.710-1.714.

On the macroeconomic front, US weekly jobless claims rose by 304,000 last week, slightly less than analysts expected of 315,000 rise. In addition, wholesale inventories rose 0.5% in May versus estimates of a 0.6% increase. 

Brent front month futures retreated below $108 per barrel, verifying signs of clear downside momentum in the oil market. The WTI front month contract has also retreated more than $5 in the last 2 weeks eyeing the key $100 per barrel level. Energy stocks posted fresh losses in today’s trading session in London. Tullow Oil, Petrofac, Royal Dutch Shell and BP retreated sharply between 0.8% and 1.6%.

Brent Front Month Futures

CO1 Comdty (Generic 1st 'CO' Fut 2014-07-10 17-14-36

Mining stocks also retreated heavily due to weaker base metals prices. With the expecption of copper which climbed near 0.5% to retest 7160, all other base metal prices retreated. Aluminium fell back to the 1925 level, while Nickel overacted after losing more than 220 points towards 22050. BHP Billiton, Rio Tinto, Anglo American, Glencore and Antofagasta fell between 0.68% and 1.45%.

LME Copper Front Month

LMCADS03 Comdty (LME COPPER    3 2014-07-10 17-13-47

However, strong gains in precious metals supported Fresnillo and Randgold stocks which ended on the positive territory after surging by 1.7% and 2.7%, respectively. Silver rallied above $21.4 today surging more than 1.4%, while Gold also climbed toward $1340/ounce.  

XAU- Gold Spot

XAU Curncy (Gold Spot   $_Oz )  2014-07-10 17-14-08 

XAG- Silver Spot

XAG Curncy (Silver Spot  $_Oz )  2014-07-10 17-14-21



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