Bank Onslaught
The sell down of global banking stocks continued overnight, slashing share prices in Europe and trampling US indices before a late session comeback. Copper and oil slid further, and bonds rallied as investors continued to re-price assets in a lower growth environment. Gold surged through resistance and is trading $50 an ounce higher this morning.
Overnight, Societe Generale reported worse than expected Q4 earnings. Investors sold the stock down 13% in response. A report showing European banks hold US $27 billion in exposures to the oil and gas industry, and market talk that formerly oil-rich sovereign wealth funds are selling shares, helped drive investor sentiment to new lows. While none of the fears that have rattled markets are yet realised, the relentless focus on possible risks will likely see another soggy Asia pacific trading session.
Lower copper and oil prices are adding to the pressure in Australia today. Rio’s slight miss on H1 profit, reported after market yesterday, could also shape investor action. Rio’s shares were initially slammed down 9% in London trading, before the focus shifted to the more prudent dividend and capex policies, sparking a rally back to finish down just 1%. Despite company reports from ALE Property, Mesoblast and Alliance Aviation Services, gold stocks are likely to be the brightest sub-sector today.
Frequently Asked Questions about this Article…
Global banking stocks are facing a sell-off due to worse-than-expected earnings reports, such as Societe Generale's Q4 results, and concerns over European banks' exposure to the oil and gas industry. This has led to a re-pricing of assets in a lower growth environment.
Falling commodity prices, particularly in copper and oil, are adding pressure to the stock market. This is contributing to investor concerns and influencing trading sessions, especially in regions like Asia Pacific.
Rio Tinto's slight miss on H1 profit initially caused its shares to drop by 9% in London trading. However, the focus on its prudent dividend and capex policies helped the stock rally, finishing down just 1%.
Gold is performing well as it surged through resistance, trading $50 an ounce higher. This is likely due to its status as a safe-haven asset amid market volatility and investor concerns over lower growth.
There are concerns that European banks have significant exposure, around US $27 billion, to the oil and gas industry. This exposure is worrying investors, especially with the current downturn in oil prices.
Market talk suggests that formerly oil-rich sovereign wealth funds are selling shares, which is contributing to the negative sentiment and driving down stock prices.
The outlook for the Asia Pacific trading session appears to be negative, as the relentless focus on possible risks and lower commodity prices are likely to lead to another soggy trading day.
Gold stocks are likely to be the brightest sub-sector today, as they are benefiting from the surge in gold prices amid the current market conditions.
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