European markets have opened positively thanks to a rebound in banking shares and modest recovery in oil prices after both took a beating the previous day. Asian markets were not so lucky with the Australian ASX falling into bear market territory, down 20% from its peak as Japanese shares plunged another 4% on the day.
Talk of Deutsche Bank doing an emergency bond-buyback to shore up its finances and relieve worried creditors has seen the German bank’s shares rally by over 10%, lifting the rest of the banking sector.
In a way it’s a bit of deju vu from yesterday when markets initially rose thanks to news from Deutsche Bank before financial and commodity sectors led to a spectacular roll-over. There is plenty of scope for another sharp twist in the direction of markets today around 3pm GMT when fed Chair Janet Yellen gives her testimony to the House Financial Services Committee.
It has been disappointment all round for European industrial production today. The weak figures for the UK, Italy and France joined the dire numbers from Germany reported earlier. The decline in UK manufacturing actually looks worse than it was since it was led by a 5.4% slump in gas & electricity production owed to the warmer winter.
Gains in the FTSE 100 were led by financials and industrials in a relief rally from yesterday’s drop. Shares of Barclays and Royal Bank of Scotland were higher but remain well down over the week. Share of Rolls Royce and BAE Systems were up ahead of earnings reports in the next few days.
Shares of Hikma pharmaceuticals tanked over 10% when it lowered its offer price for acquiring Roxanne Laboratories after receiving new information regarding its target’s 2015 financial performance. Investors are never too enthused about spending potential dividend-cash on acquisitions so lowering the earnings expectations after the offer shows a lack of due diligence and has angered shareholders.
US markets look set for a strong open in the wake of the election primary victories for Donald Trump and Bernie Sanders ahead of Janet Yellen’s testimony and earnings from Tesla, Cisco and Time Warner.
Shares of Disney are expected to drop despite the film studio reporting its best quarter ever thanks to the success of Star Wars: The Force Awakens. The fear is that Disney’s cable television business which includes ESPN will suffer from cable subscribers “cord cutting” in favour of online streaming services like Netflix.
USA pre-opening levels
S&P 500: 17 points higher at 1,869
Dow Jones: 94 points higher at 16,014
Nasdaq 100: 50 points higher at 3,947
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