Equity markets in Europe have started the week on the right note as banking stocks are in demand after the Basel III announcement on Friday.
The rules and regulation surrounding the banking sector weren’t as restrictive as initially though, and in terms capital requirement, things are looking fairly positive.
HSBC shares are up 1.7% after its deferred prosecution agreement with the US Department of Justice (DoJ) has expired. This mean the DoJ can’t impose any further fines on the bank for its lax money-laundering policies. The bank was fined $1.9 billion when it emerged a Mexican drug cartel laundered funds through their business. Since then HSBC was tightened up their controls and now they have effectively been given the all-clear by the DoJ. HSBC shares have been rising since April 2016, and if the bullish sentiment continues it could target 800p.
Babcock stated the adoption of International Financial Reporting Standard (IFRS) will not require a change in ‘contract revenue or profit recognition’. Investors welcomed the news, and the stock is up 1.8%.
EUR/USD is pushing higher even though Italy posted disappointing retail sales figures. In October, Italian retail sales fell by 2.1% on an annual basis, and that compares with the previous report of 3.4%. The euro has largely had a poor December, but the move higher for the last few days fits in with the wider positive trend for 2017.
GBP/USD is a touch softer today ahead of Theresa May’s statement to MPs later today in relation to Brexit talks. The breakthrough that was achieved on Friday could was not welcomed by all Conservative MPs, and the more hard-line elements of her party could pose a problem for Mrs May.
Bitcoin futures started trading on the Chicago Board Options Exchange (CBOE) last night, and the prices surged as demand as the futures contract proved to be popular. Credibility has been added to the cryptocurrency now that a well-established exchanged like to CBOE is offering it – and more exchanges will offer it too.
We are expecting the Dow Jones to open up 27 points at 24,356, and we are calling the S&P 500 up 2 points at 2653.
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