Financial news

Local equities commenced trading the new week on a slightly positive footing, however, the initial gains were not sustained throughout the session as the MSE Index terminated in negative territory, with an ending value of 4,844 points. 6pm Holdings was the sole gainer on the day, as the recently listed equity continued to move from strength to strength by gaining another penny to close at £0.74. In fairness trading activity was soft with just 300 shares being purchased by a single investor.

HSBC Bank Malta reclaimed the Lm1.97 level as 7,007 shares were swapped across 11 transactions. Since the beginning of the month, HSBC has been struck in a tight trade range some two percentage points above and below the day's closing price.

The day's trades in Bank of Valletta consisted of 6,960 shares, carrying a market consideration of Lm3.56,4 which were swapped across 15 transactions. The equity initially climbed to the Lm3.57 level before retracing and breaching Friday's closing price by 0c4, to close at Lm3.56,4. FIMBank, the trade finance specialist which is currently raising approximately $25 million in rights issue, dropped to its lowest level since March 2007 as 1,770 shares transacted across a single deal at the $1.70 level.

Elsewhere in the market, a single deal in GO was executed without altering its previous closing price of Lm1.34. At the end of the session, however a further 832 shares remained unfilled on the bid side at this level against supply for 8,330 shares best offered at Lm1.35. Activity in the fixed interest sector of the market was limited to just two corporate bonds and four government stocks. The euro denominated tranche of the 4.60 per cent HSBC Bank Malta 2017 traded unchanged at €95.00 while the dollar denominated 8.00 per cent Bank of Valletta 2010 shed 20 ticks to trade at the $107.00 level.

US economic review - weekly round-up

A relatively quiet week was characterised by the publication of the minutes of the October 31 Federal Reserve meeting. The minutes indicated that the Committee's decision to cut interest rates at that time was largely driven by shaky financial market conditions.

Meanwhile sales gained in the days after the US thanksgivings holiday, as retailers lured more customers with discounts even as individual shoppers spent less on average. Surveys reported an 8.3 per cent gain in sales the day after Thanksgiving, a bigger increase than expected.

The National Retail Federation said 147 million customers visited stores, up 4.8 per cent from a year earlier, while shoppers spent 3.5 per cent less per person; overall net sales were positive. A shift in consumption patterns was also perceived as consumers seemed to prefer less expensive consumer products instead of the high tech equipment largely in demand last year. The US Dollar continued to show weakness driven by the perception that investment returns are better outside the US increasing fears that for the first time since the 1970s the US may be facing the risk of stagflation.

Stagflation, decreasing growth together with high inflation, may be the outcome if the weakness in the housing market continues to extend to other parts of the economy. Record oil prices and the dollar weakness, on the other hand are likely to increase inflationary pressures.

This article has been prepared by Bank of Valletta p.l.c. (the Bank), which is licensed to conduct investment services business by the MFSA, for your general information only. This information is not a solicitation or offer by the Bank to acquire or sell securities. Nor does it constitute any form of advice by the Bank. Appropriate advice should be obtained before making any such decision. Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.