Financial news

During the start of this week's session, the MSE index saw a decrease of 1.83 per cent to close at 3,300 points, dragged down by the two largest banking components. The day's trading consisted of 52 deals spread over three different equities with an aggregate value of €177,995.

Bank of Valletta was the centre of attention following the publication of its full year results last Friday. The equity commenced trading at around its previous closing price of €3.40, however, subsequent selling pressure pushed the price to a daily low of €3.20. Buying interest resurfaced late in the session to trim some of the session's losses and heaved the price to the €3.25 level, down 4.41 per cent nonetheless. At the end of the session, a further 9,574 shares remained unsatisfied at a bid price of €3.25 while supply stood for 6,000 shares best offered at €3.35.

Last Friday, Bank of Valletta announced a pre-tax profit of €40.6 million for the full year ended September 30. All shareholders on the company's register as at November 10 will be entitled to receive a gross final dividend of 6c75, while a bonus share for every five shares held will be distributed to shareholders on January 15.

Trading activity in HSBC Bank Malta consisted of 14 trades for 26,975 shares. The banking equity followed its main competitor's fate as it dropped 3.41 per cent to close at the €2.801 level.

RS2 Software was the only non-mover for the session, with two trades of 2,500 shares being matched at €0.75.

In the fixed interest sector of the market, activity was spread across four corporate bonds and two government stocks. The 5.9% HSBC Bank Malta 2018 attracted the highest turnover, with 100,000 nominal, as it closed unchanged at €103.50 The 7.8% MGS 2018 had 93,618 nominal swapped over a sole transaction, pushing the price down by 1.48 per cent to close at €122.76.

US economic review

The Federal Reserve has cut the funds rate by another 50 basis points to one per cent, thereby revisiting the low in overnight borrowing cost last reached in June 2003. The statement following the announcement cited weakening consumer expenditures, business equipment spending, industrial production and net exports.

The Federal Open Market Committee (FOMC) downplayed inflation risks, a function of declining commodity prices and weaker growth prospects and repeated that "downside risks to growth remain".

This leaves the door open for the Fed to trim rates further if either the financial or economic outlook deteriorates beyond what is built into the Fed's forecasts. These updated forecasts will be available on November 19.

The United States economy shrank last quarter as the third quarter Gross Domestic Product came in at a negative 0.3 per cent. Nonetheless, the decrease was less than expected as consumer spending fared somewhat better. Overall this marks the first time since the fourth quarter in 1991 that consumer spending has declined. Additionally, government spending, mostly federal, was up a sharp 5.8 per cent, significantly contributing to overall growth.

Meanwhile, consumer confidence fell to an all-time record low in October (38.0 versus 61.4 previously).

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.