Financial news

The Malta Stock Exchange Index gained 0.3 per cent yesterday to close the session at 4,223 points. This was mainly due to small increases registered in three of its components. Activity was on the low side, with a mere 16 deals being struck across five equities for a total of €67,481 in value.

Buying interest for a total of 13,272 shares in Go saw the price shoot up to close at €2.60, which translates to a four per cent increase on the day. Activity in the equity commenced at the previous day's closing price of €2.50 and moved higher thereafter to close the session at the higher end of the day's trading range. An early deal in Simonds Farsons Cisk to the tune of 500 shares saw the price increase by 2c or 0.72 per cent, to close at a multi-year high of €2.78.

Three trades in Malta International Airport for 2,200 shares were filled at €3.12, representing an increase of 0.32 per cent. At the closing bell, there remained 5,000 shares best bid at €3.06, while the best offer was for 300 at €3.14. Bank of Valletta was the day's only laggard as the banking equity dropped by a mere 0.1 per cent to close at €4.864 on a volume of 3,200 shares exchanged over two transactions. Trading activity in International Hotel Investments of 9,523 shares did not alter the previous price level of €1.05.

In the fixed interest sector of the market, activity was spread across one corporate bond and eight government stocks with the 5.7 per cent MGS 2012 (III) attracting the highest turnover with 659,318 nominal being swapped over two transactions to close at €102.59, while the 7.8 per cent MGS 2018 registered an increase of 1.29 per cent over 500,000 nominal.

Weekly eurozone economic review

As it was widely expected the European Central Bank hiked interest rates to 4.25 per cent. According to the ECB president, Jean Claude Trichet, the decision was unanimous. The decision to raise rates was primarily motivated by the willingness to "prevent broadly based second-round effects and counteract the increasing risk to price stability".

The ECB comments somewhat undermined the downside risks to growth as the ECB had to avoid sending two conflicting signals, given that it had just increased the base rate. This comes into contrast with the recent economic data emanating from the euro-area.

In fact the eurozone's services economy slipped further into contraction, more than expected from a number of economists. The Purchasing Manager Index (PMI) covering services companies ranging from banks to hotels fell to 49.1 in June from 50.6 in May.

All four major eurozone economies saw business slacken in June, but only Germany and France remain above the 50-level mark. A breach below the 50-level mark would signal contraction. This continues to highlight the divergence between countries in the euro-area, where countries like Italy and Spain have been issuing deteriorating economic data for a number of months, while Germany and France linger on.

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.