European indices trade positively on Monday as banks gain

The FTSE 100, DAX and CAC all posted gains in early trading as stocks recovered from initial weakness. We have seen investors come in to buy stocks after a somewhat aggressive sell off in later trading in Friday.

There is a lack of economic data out today and so trading has been given a bit of a free reign. All three heavyweight sectors; miners, energy and banking stocks are higher today with the latter gaining the most and as such leading European indices higher.

However, gains were rather subdued in trading and investors clearly still trade with a fixated eye on developments in Libya – where fighting has intensified over the last few days – and any subsequent spikes in the price of crude oil. Both Nymex and Brent crude oil has rallied higher this morning on the escalating violence in Libya and traders remain sensitive to any significant price spikes in crude oil.

Individuals have been speculating about the situation in Libya potentially turning into a civil war and whilst the weekend’s battles have certainly already had the hallmarks of this, a fierce and prolonged civil war could have significant implications for the price of crude oil and equity markets alike.

One would dread to think the impact on the UK economy, with interest rate hikes to come, should motorists start having to pay £2 per litre at the pumps and the situation in Libya and the Middle East is certainly threatening this, whether we like it or not.

The scenario in North Africa and the Middle East is likely to keep a roof on any equity rally for the time being until traders start to see the price of crude oil consolidate.

Inmarsat shares slump 10% on earnings
Traders sold out of Inmarsat shares this morning after the satellite telecommunications operator said that maritime revenue would grow by 2% – 4% this year, below market expectations and dampening sentiment somewhat. The company relies on maritime operations for almost half its total revenue and so the lower than expected growth and cautious tone of the results has hit trading sentiment today. As a result, shares hit a new 16-month low of 587p.