Europe
We’ve seen another day of losses today as rising bond yields and continued uncertainty over the latest Greece negotiations contrives to sap confidence in equity markets.
The German DAX has dropped below 11,000 for the first time since mid-February, as bund yields head back towards the 1% level, closing lower for the fourth day in a row, and set its worst losing sequence this year.
Greek stocks have traded slightly higher on talk that the Greek government has put forward some new proposals to EU creditors in an attempt to break the deadlock, however on the face of it, they sound and look like a rehash of old proposals which have already been rejected and the likelihood is they will probably go the same way as previous proposals, absolutely nowhere.
The FTSE100 has also continued to fall with all sectors in negative territory and the index at its lowest levels since early March, weighed down by the pharmaceutical and technology sector.
In company news the UK’s biggest bank HSBC Holdings Plc (LONDON:HSBA) announced the latest in its plans to restructure itself as part of the new regulatory environment with respect to the ring-fencing rules. 25,000 jobs are set to be cut globally in a drive to reduce expenditure by $5bn, with 8,000 of them due to go in the UK, while the HSBC brand and logo will disappear from the UK high street. On any ordinary day cuts of the type announced today would have normally produced a significant share price rebound, the fact that we haven’t seen that points to a lack of confidence that the management measures go far enough.
There has been talk that the bank could revive the Midland Bank brand which it took over in 1992, the old listening bank, though they could do worse than extend the First Direct brand which has a much higher customer satisfaction rating.
The main risk in doing that is they could spoil a brand that has been at, or near the top of the brand rankings for years, and is very highly regarded by its customers.
US
US markets opened lower today, pulled lower by falling bond markets as US treasuries yields hit their highest levels since early October last year.
The rise in yields was also helped by better than expected job openings numbers for April, showing continued strength in the US labour market. While this is a very positive sign it will matter little if skills gaps mean the openings don’t get filled, and despite rising JOLTS numbers the ADP and official payrolls numbers have been lacklustre in recent months.
Stocks in focus included General Electric (NYSE:GE) who announced the sale of their finance business to the Canadian Pension Plan Investment Board for $12bn.
Apple shares (NASDAQ:AAPL) also continued their declines from yesterday after the latest product announcements at WWDC yesterday.
FX
The US Dollar has had a fairly positive day today only losing ground against the Canadian dollar and the Norwegian Krone as oil prices have risen sharply on expectations that tomorrow’s inventory data could see a draw for the fifth week in succession.
The euro has been amongst the biggest fallers as concerns about a Greece solution ripple out into reported differences between German leader Angela Merkel and her finance minister Wolfgang Schaeuble.
Commodities
The resilience in oil prices continues to surprise despite OPEC pledging to keep production levels at their current levels earlier this month. Expectations of another draw in oil inventories, as stockpiles fall on the back of lower rig counts, is helping under pin prices.
Even so with Brent production levels still above quota levels it is hard to see how the current rebound can be sustained for any length of time, and the reality is that we look as if we’ve established a new trading range, albeit at slightly higher levels.
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