Market summary
European markets ended the trading session lower as United States President Donald Trump said he had a good conversation with his Chinese counterpart Xi Jinping. Trump pointed out their discussions were focused on trade and that the talks are going well ahead of the G20 summit in Argentina. Meanwhile, corporate quarterly earnings kept coming in with Royal Dutch Shell, Spotify, and DowDuPont reporting earlier in the day. Apple Inc. reported after the closing bell in the US, stating that sales for the crucial holiday quarter would likely miss expectations, on weakness in emerging markets and foreign exchange costs.
The DAX closed 0.07% in the red with Adidas AG as the worst performer closing 1.92% lower. The FTSE 100 ended the trading session 0.46% lower. The worst trading stock was BP Plc, losing 4.55% at the closing bell. The CAC 40 decreased 0.41% at the market close, led by Valeo losses of 3.40%.
Oily corner
Crude prices traded in the red with both benchmarks dropping almost 3% as investors grew increasingly worried about the rising trade tensions between the United States and China. Investment incentives were lowered amid fears that Washington will introduce tariffs on all Chinese goods with Trump expected to "act aggressively" if the trade talks end without a deal.
Meanwhile, market watchers were also worried that the slowdown in the global economic expansions could hurt the demand for oil. On Tuesday, The International Energy Agency (IEA) head FatihBirol noted that oil demand is under threat from high oil prices and deceleration of economic growth.
No change in interest rates for Bank of England
Bank of England (BoE) decided to keep its interest rates unchanged. The Monetary Policy Committee (MPC) reached a unanimous decision to maintain the Bank Rate at 0.75%.
The MPC also voted in favour of maintaining the stock of sterling non-financial investment-grade corporate bond purchases at £10 billion and keeping the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.
"At this meeting the MPC judged that the current stance of monetary policy remained appropriate," the bank stated. “The Committee also judges that, were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon," the MPC added and stressed that any future interest rate hikes are likely to be limited and at a gradual pace.
To this news, the British pound rose to the highest level in a week against the dollar. Sterling hit a session high of 1.2934 shortly after the BoE said it voted unanimously in favour not to change the Bank Rate.
Disclaimer: This article was issued by Rodrick Duca, trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.