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Investors turn to risk on mode

We ended last week on a positive note after the US posted jobs data which was far better than expected. However there are investors who cash in on their profits at the end of the week, not knowing what the weekend could bring.

To most investors’ surprise, the week started off with a series of positive data which abated some of the uncertainties which was burdening the markets.

The most influential data which triggered risk-on mode in equity markets was as follows:

BoE rate cut hope

No Bank of England policymakers objected to a decision to cut banks' capital requirements at a meeting in the wake of Britain's vote to leave the European Union, a record of their meeting showed on Tuesday.

Last week the BoE's Financial Policy Committee lowered a capital requirement for banks, reversing a decision made in March in an attempt to cushion the expected shock to Britain's economy from the referendum result.

Japanese stimulus

A weekend election victory by Japan's ruling coalition paved the way for more stimulus, rekindling investor appetite for stocks and risk assets worldwide.

Japanese Economy Minister Nobuteru Ishihara said on Tuesday he would start discussions on the stimulus package's size, which may be more than 10 trillion yen, and the government may issue construction bonds, which are earmarked for public works projects.

ECB meeting coming up

The next ECB meeting will be held today week. Investors are expecting the ECB to hint an increase in monetary policy measures to stimulate growth in the EU given the uncertainty about global growth.

Italian banks

An agreement to safeguard Italy's struggling banks within European Union rules is within reach, Prime Minister Matteo Renzi said on Monday.

Italy is in talks with the European Commission to allow public support for its weakest lenders. European Union rules allow state aid to banks only exceptional circumstances.

Theresa May

Theresa May took over the job of British prime minister from David Cameron on Wednesday after a series of political shocks caused by Britain's vote to leave the European Union.

May, who has been interior minister for six years and is seen by her supporters as a safe pair of hands to steer Britain through the disruptive process of leaving the EU, will become Britain's second woman prime minister, after Margaret Thatcher.

Companies start off earnings season on a positive note

Daimler's second-quarter operating profit rose on higher earnings from vans and bus operations, as the group kept to its guidance for a small increase in full-year profit.

Earnings before interest and tax (EBIT), adjusted for special items, climbed "significantly above" market expectations to 3.97 billion euros from 3.76 billion a year earlier.

 

This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.  

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