ETX Capital Daily Market Bite, 29th January, 2013: Mkts Edge Up Thanks To Decent Data; US Eyed
January 29, 2013 10:59 am
January 29th, 2012, Daily Market Bite from Ishaq Siddiqi Market Strategist.
European financial markets are steady early Tuesday but again doing as investors are still pausing for breath following the bumper rally this month which has pushed markets to 5-year highs with US stocks particularly not far off their all-time highs. Traders again are awaiting more data and earnings before adjusting appetite for risk but have taken some comfort in this morning’s rebound in German consumer confidence which rose a touch and French consumer confidence stabilizing, meeting market expectations.
Looking ahead, eyes will be on an Italian debt auction and more US earnings [Ford, Pfizer, US Steel and Eli Lilly to name a few] and US economic data [consumer confidence and another housing report]. Although US indices snapped a 6-day winning streak in Monday’s session, the Dow Jones Industrial Average is still around 1.9% away from its all time high of 14,164.53, reached in October 2007, while the S&P500 remains above the 1500 level, not far from its all time high of around 1565.
US stock futures are currently indicating a flat open on Wall Street — it is unlikely both the DJIA and S&P500 will be able to find fresh impetus to push higher in Tuesday’s session given their overbought conditions — most of the attention will be on Wednesday’s release of ADP jobs report, US 4Q GDP and the Fed’s policy meeting.
In corporate news, US and UK authorities are reportedly seeking a GBP500million settlement with Royal Bank of Scotland over charges of manipulating Libor that would include a guilty plea to criminal charges. RBS would be the third bank after Barclays and UBS to settle allegation of rate-rigging with Deutsche Bank likely next to be fined by authorities.
It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS however it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates.
The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price. Currently, RBS shares are down around 2.3% on the Libor allegations and reports that the bank is reportedly set to pay up to £250 million in bonuses.
At the same time, the settlement by authorities in the US would involve the RBS pleading guilty to criminal charges in addition to paying a penalty, something RBS executives are resisting to do. That said, Hopes are that these scandals will prompt a turnaround in the banking system by management to address the issue of rate-rigging which would lead to further restructuring, deleveraging and de-risking of current assets.
January 29th, 2012, Daily Market Bite from Ishaq Siddiqi Market Strategist.
European financial markets are steady early Tuesday but again doing as investors are still pausing for breath following the bumper rally this month which has pushed markets to 5-year highs with US stocks particularly not far off their all-time highs. Traders again are awaiting more data and earnings before adjusting appetite for risk but have taken some comfort in this morning’s rebound in German consumer confidence which rose a touch and French consumer confidence stabilizing, meeting market expectations.
Looking ahead, eyes will be on an Italian debt auction and more US earnings [Ford, Pfizer, US Steel and Eli Lilly to name a few] and US economic data [consumer confidence and another housing report]. Although US indices snapped a 6-day winning streak in Monday’s session, the Dow Jones Industrial Average is still around 1.9% away from its all time high of 14,164.53, reached in October 2007, while the S&P500 remains above the 1500 level, not far from its all time high of around 1565.
US stock futures are currently indicating a flat open on Wall Street — it is unlikely both the DJIA and S&P500 will be able to find fresh impetus to push higher in Tuesday’s session given their overbought conditions — most of the attention will be on Wednesday’s release of ADP jobs report, US 4Q GDP and the Fed’s policy meeting.
In corporate news, US and UK authorities are reportedly seeking a GBP500million settlement with Royal Bank of Scotland over charges of manipulating Libor that would include a guilty plea to criminal charges. RBS would be the third bank after Barclays and UBS to settle allegation of rate-rigging with Deutsche Bank likely next to be fined by authorities.
It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS however it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates.
The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price. Currently, RBS shares are down around 2.3% on the Libor allegations and reports that the bank is reportedly set to pay up to £250 million in bonuses.
At the same time, the settlement by authorities in the US would involve the RBS pleading guilty to criminal charges in addition to paying a penalty, something RBS executives are resisting to do. That said, Hopes are that these scandals will prompt a turnaround in the banking system by management to address the issue of rate-rigging which would lead to further restructuring, deleveraging and de-risking of current assets.
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