Fluc­tu­a­tion in eq­uity mar­kets prompted by Trump’s sur­prise vic­tory

Malta Independent - - BUSINESS & FINANCE -

Af­ter an ini­tial sell­off prompted by the sur­prise of Trump’s win wore off, Euro­pean stocks on Wed­nes­day were boosted by in­dus­tries seen ben­e­fit­ing from the out­come. Heavy­weights such as banks and health-care shares ral­lied, as did min­ers and con­struc­tion. The Repub­li­can’s prom­ises to in­crease pub­lic spend­ing also spurred bets for higher in­fla­tion, drag­ging down bond-proxy sec­tors such as util­i­ties and real es­tate. The Stoxx 600 is up 2.7 per­cent this week.

A gauge of Stoxx 600 lenders de­clined from its high­est level in al­most eight months. Banks surged 7.8 per­cent in the past four days on bets of higher in­fla­tion lead­ing to im­proved prof­itabil­ity, and an eas­ing of fi­nan­cial rules.

Europe’s banks, which un­til re­cently were the year’s worst-per­form­ing sec­tor in the Stoxx Europe 600 In­dex, are bounc­ing back as bond yields are re­bound­ing from their sum­mer lows, eas­ing con­cerns over prof­itabil­ity.

The Stoxx 600 has re­bounded 4.3 per­cent in four days, af­ter com­plet­ing a streak of 11 days with no ad­vances, its long­est since 1994. Eco­nomic data are beat­ing fore­casts, and an­a­lysts see a re­vival of profit growth for Stoxx 600 com­pa­nies in the next three years. Fund man­agers be­gan send­ing money to Europe’s eq­uity funds again, af­ter a record 38 weeks of out­flows, a Bank of Amer­ica Corp. re­port cit­ing EPFR Global data showed last week.

Mar­kets in the euro re­gion po­ten­tially have tur­bu­lent pe­riod ahead with an Ital­ian con­sti­tu­tional ref­er­en­dum in De­cem­ber and elec­tions in France, Ger­many and the Nether­lands next year that may kick out rul­ing par­ties or coali­tions and over­turn eco­nomic poli­cies.

Ster­ling has climbed against all of its 31 ma­jor peers since last Fri­day. It’s the sur­prise win­ner dur­ing the week of Don­ald Trump’s elec­toral up­set in the U.S. that threw mar­kets into tur­moil as traders reap­praised pop­ulist move­ments and in­fla­tion.

This ar­ti­cle was com­piled byVal­letta Fund Man­age­ment Lim­ited, a mem­ber of the BOV Group.Val­letta Fund Man­age­ment,TG Com­plex, Suite 2, Level 3, Brew­ery Str., Mriehel BKR 3000 Freep­hone: 80072344. E-mail: in­fovfm@bov.com. Web­site: www.vfm.com.mt. Val­letta Fund Man­age­ment Lim­ited is li­censed by the MFSA.

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