Financial news

Buying activity in the second largest listed equity single handedly helped the MSE Index open the new week on a positive footing gaining 0.16 per cent to close the day at 4,179 points. Activity was spread across seven equities with three others declining and the same number remaining constant.

Bank of Valletta bounced back robustly on Monday to register its only second positive close in 20 sessions, during which the equity slumped to its lowest levels in three years. The day's activity consisted of 8,739 shares which were exchanged across 18 trades for a total market consideration of €40,714.

Initial trades were struck at the €4.621 level, however with best supply suspended at €4.70. This forced the hand of buyers who raised their bids to that amount towards the end of the session. Nevertheless, the final trade of the day was executed at €4.69 which meant that the equity closed higher by seven cents or 1.5 per cent.

On the contrary, HSBC Bank Malta gave back one cent as 6,434 shares were exchanged across 11 transactions squeezing the price down to €3.74 while FIMBank declined by the slimmest of margins as two investors swapped a mere 1,590 shares at the $1.889 level.

International Hotel Investments suffered slightly, falling back to €1.07 as a paltry 280 shares were swapped across three transactions.

Elsewhere, activity struck in Malta International Airport, GO and Maltapost did not alter their previous closing prices of €3.12, €2.65 and €0.78 respectively.

Weekly US economic review

During a speech, Federal chairman Ben Bernanke last week expressed his concerns on inflation albeit emphasising the need for a stronger dollar. In discussing the financial and economic outlook, Mr Bernanke stated that "broadly speaking, the functioning of financial markets has improved of late, but conditions remain strained". He continued by referring to the destabilisation of the housing market and the implications brought about by the surge in oil prices on consumer spending.

On the data front, the manufacturing and non manufacturing ISM has partially recovered after both series collapsed at the beginning of the year. Productivity for the first quarter was revised up slightly, providing more evidence that the underlying trend is holding firm.

The May employment data triggered a few shocks in the market. Payrolls declined by 49,000 led by construction, manufacturing, retail trade and professional/business services.

The weakness in construction and manufacturing was no news, but the continued weakness in retail employment is consistent with slower consumer spending.

The major surprise in the data was the unemployment rate, jumping to 5.5 per cent in May, from 5.0 per cent in April, posting the largest month to month rise in more than two decades.

Elsewhere, US consumer borrowing increased more than forecast in April. Concurrently the Mortgage Bankers Association said that new foreclosures in the first quarter rose to 0.99 per cent of all US home loans from 0.83 per cent in the previous quarter.

In conclusion the quarterly Federal Deposit Insurance Corporation (FDIC) banking data for the first quarter showed a sluggish US banking recovery.

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.