Financial news

In yesterday's session at the Malta Stock Exchange, selling pressures in Bank of Valletta and Lombard Bank dragged the MSE Index down by 0.2 per cent to close at 4,220 points. The day's trading consisted of 39 deals spread over eight different equities, with an aggregate value of €257,869 of euro denominated equities and just over $1.5 million in FIMBank, the only US Dollar denominated share on the local exchange.

Trading in Bank of Valletta started at its previous closing price of €4.85, only to drop 5c in the last minutes of trading. This represents a decline of a full one per cent over a total turnover of 5,200 shares swapped across eight transactions.

Lombard Bank suffered a similar fate, though over a lower volume of 1,000 shares dealt towards the end of trading at €3.075, a loss of 4c5 or 1.4 per cent.

On the other hand Maltapost gained 5c on turnover of 15,044 shares which changed hands across eight trades. This corresponds to an increase of 6.5 per cent over the previous closing price.

Interest in Malta International Airport consisted of a low volume of 540 shares exchanged at a premium of 0.2 per cent over the previous price to end the session at €3.115.

FIMBank was the day's most liquid equity with a grand total of 800,000 shares changing ownership across two transactions.

Activity in Middlesea Insurance to the tune of 48,063 shares failed to see the closing price of €3.43 being changed.

Weekly UK economic review

The minutes of the Bank of England's May policy meeting, published last week, highlighted the committee's concern about inflation expectations, arguing that, "the committee's behavior was likely to have a material influence" on that formation. Higher prices have been cited by the Monetary Policy Committee as a key downside risk to consumption on account of the squeeze on real incomes.

Meanwhile, economic data appears to be portraying a very different picture to the unfolding evidence of British consumer weakness. The latest retail sales data suggests resilience in figures for the second quarter. Retail sales in terms of value grew by 4.3 per cent, year on year in April, only slightly down on March's 5.2 per cent. An interesting point regarding this data is that food sales volume outpaced non-food sales and this was particularly evident in April's data. This signals that high non-core inflation which includes food and energy, is squeezing core spending.

From a policy point of view, with rising inflationary pressures not corresponded by signs of struggle, the chances of further easing will be delayed. In fact the markets have priced out further rate cuts in the UK, and now see a tightening by year end.

The CBI May Industrial trends survey recorded sustained weakness in output expectations, though price pressures seem to have accelerated. While the output balance remained at zero and orders were weak, the price expectations balance rose to its highest since early 1995.

In conclusion, business investment declined by 1.4 per cent during the first quarter, led by a drop in production, construction and distribution.

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.