Financial news

During the first trading session of the week, strong gains in Simonds Farsons Cisk outweighed soft declines elsewhere in the market forcing the MSE Index to close higher by 0.06 per cent at 4,496 points.

Simonds Farsons Cisk was the day's only gainer as the equity rallied 10c or 3.8 per cent as 250 shares were purchased up to the €2.70 level. After Friday's close, the food and beverages company reported an 88.3 per cent jump in pre-tax profits, published at just above €4 million, with directors proposing a final net dividend of €0.05316 per share. Following a revaluation of its properties, its current market capitalisation of €69 million is significantly lower than the company's net asset value of €83.3 million.

Yesterday's session marked the first day of trading following a four for one split in Lombard Bank Malta's shares. The day's activity consisted of 4,600 shares which were swapped across two transactions at the €3.25 level which signifies no change in the company's market capitalisation value. Bank of Valletta was the day's most active equity with 15,278 shares being swapped across 19 transactions. The equity touched a high of €5.20 before terminating the session at €5.185, thereby closing at an intraday low. Shares are still trading with the attached right to receive a net interim dividend of €0.0878 per share.

HSBC Bank Malta closed the session flat, as shares recovered from a yearly low of €4.16 touched mid-way through the session. The equity was the day's most liquid with a grand total of 21,370 shares being swapped across 16 transactions.

On the contrary, FIMBank closed weaker by 0.3 per cent as 12,990 shares were exchanged across three transactions. Here too, the equity recovered to the $1.905 level after briefly trading at $1.895.

Elsewhere in the market, a single transaction in Middlesea Insurance saw a mere 100 shares trading at the €3.41 level, which represents a 0.6 per cent discount over Friday's closing level. Similarly, two investors swapped 3,000 shares of Datatrak Holdings at €0.291, which signifies a 4.6 per cent drop from its previous closing level.

US weekly review

To no one's surprise, the Federal Reserve has lowered its rate by 25 basis points to two per cent on its last Federal Open Market Committee (FOMC) held on April 30. The accompanying statement to the rate decision hinted at a pause, while not ruling out further cuts, if necessary. The next Fed meeting is scheduled for June 25. In the meantime the influx of economic data should give market participants a better view of the current state of the US economy. Most economists are still predicting that the Fed will have to cut rates even further.

GDP increased by a trivial 0.6 per cent annualised in the first quarter. This growth rate is markedly below the economy's potential rate of 2.5 per cent, but on a brighter side of things the figure posted was still above zero. The important question most economists are posing is for how long will the US economy hold? Most of the economists are stating that the largest economy in the world is already in a recession, and most Americans are of the view that if the economy is not yet in recession, it surely feels like it.

Meanwhile, the Fed announced that it will expand its Term Auction Facility (TAF) for banks by 50 per cent to $75 billion after higher borrowing costs have blunted the impact of the four-month old programme. The Fed also increased the swap lines with the ECB from $20 billion to $50 billion, and doubled the amount with the Swiss national Bank to $12 billion.

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.