Equity markets lose shine as oils drag and Egyptian tension weighs on sentiment
City Index February 3, 2011 5:05 PM
<p>After two solid days of gains, European equity markets traded lower as an update from Royal Dutch Shell missed expectations and the increasingly fractious situation […]</p>
Shares in Royal Dutch Shell fell by over 3% as a rise in fourth quarter profit was offset by higher taxes and weaker trading, the oil giant’s fall contributed to over half of the 30-point losses on the index. Investors have seen the shares rally almost 20% since the beginning of December, and so disappointing numbers were a welcome opportunity to take some profits.
Away from oil stocks, equities traded almost at parity with heavyweight banks Barclays and HSBA posting gains while miners were broadly positive with Xstrata featuring on the leader board and Rio Tinto edging better. The mixed performance highlighted investors’ caution as geopolitical tensions remained at the fore. The markets have rallied hard in the last two days on the hope that the Egyptian crisis may have been coming to a calm and satisfactory end, but recent clashes have unnerved investors that the situation could worsen as the current administration may be seeking to exert authority over protesters. Brent Crude headed towards $103 a barrel as tensions escalated.
On a more positive note, investors were heartened by solid UK sector PMI numbers that demonstrate the sector is back in good health; ally this with solid construction numbers yesterday and investors are hoping that the disappointing GDP number last quarter was a temporary blip.
Investor attention will now turn to US jobless numbers this afternoon that should give some insight as to what to expect from the all-important non-farm numbers tomorrow. As ever, traders will be looking to see the US recovery remaining on track but more importantly hoping to see the recovery impacting positively on the labour market.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.