With US markets closed today for the Martin Luther King Day holiday, equity markets have been fairly quiet overall, with the S&P/TSX 60 (Toronto60 CFD) trading essentially flat. Trading in the U.K., however, has brought to the fore one battle that may play out over the course of this week.
Earlier today, HM Treasury announced another round of measures to shore up the U.K. banking system. In addition to extending previous measures such as enhanced discount window lending, the Treasury established a new facility to purchase asset backed securities and a facility for the Bank of England to buy high quality private sector assets. The Treasury also announced a scheme to provide a backstop for banking assets, with the bank taking exposure to an initial amount and the government taking risk on the balance, similar to facilities provided to Bank of America (NYSE: BAC, Stock Forum) and others.
This government move, combined with U.S. moves to shore up Bank of America on Friday, and news that Royal Bank of Scotland (RBS UK) expects to report tens of billions of dollars worth of losses from last year, may cast a cloud over market sentiment and raise concerns that there may still be lingering problems in the banking sector. This could be seen in banking sector trading in the U.K., where Lloyd’s (LLOY UK) fell by 32%, Barclays (BARC UK) fell by 19% and HSBC (HSBA UK) fell by 12% today. This sentiment, however, also appears to have impacted sentiment toward the Canadian banking sector to a lesser extent with TD Bank (TSX: T.TD, Stock Forum) down 2.9%, Royal Bank of Canada (TSX: T.RY, Stock Forum) down 2.3% and CIBC (TSX: T.CM, Stock Forum) down 1.2%.
On the other hand, the inauguration of Mr. Obama as U.S. President tomorrow may spark some optimism in the marketplace both in terms of anticipation of how the incoming administration may move to stimulate economic activity, but also possibly some relief over the departure of the previous administration. This may set up a classic bearish versus bullish battle that may play out among investors as the week unfolds.
There also are other scheduled developments that may impact trading. The U.S. economic calendar is light this week with jobless claims, housing starts and building permits due on Thursday. In Canada, the schedule appears more robust with a Bank of Canada interest rate decision tomorrow, retail sales and a monetary policy report Thursday and CPI on Friday.
Earnings season also continues this week with reports due from IBM (NYSE: IBM, Stock Forum) and Johnson & Johnson (NYSE: JNJ, Stock Forum) tomorrow; Apple (NASDAQ: AAPL, Stock Forum) and eBay (NASDAQ: EBAY, Stock Forum) Wednesday; Google (NASDAQ: GOOG, Stock Forum) and Microsoft (NASDAQ: MSFT, Stock Forum) Thursday and General Electric (NYSE: GE, Stock Forum) on Friday. Major Canadian releases include Suncor Energy (TSX: T.SU, Stock Forum) tomorrow; plus Canadian National (TSX: T.CNR, Stock Forum) and Potash (TSX: T.POT, Stock Forum) on Thursday.
Upcoming Free Seminars:
In the coming weeks, Colin Cieszynski will be making a number of free presentations for accredited investors across Canada.
Location Date Time Topic
Montreal Jan 21 12:30 pm and What a Year! An overview of 2008
and look
6:30 pm ET Ahead to 2009
Toronto Jan 28 6:00pm ET What a Year! An overview of 2008
and look Ahead to 2009
For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at:
https://www.cmcmarkets.ca/en/content/education/free_seminars.do
Upcoming Client Trading Webinars:
In the coming months, Colin Cieszynski will be presenting a series of free webinars on trading for CMC Markets clients only from coast to coast.
Date Time Topic
January 20 7:30pm ET MarketTrends Monthly Review
(for CMC Markets clients Only)
For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at:
https://www.cmcmarkets.ca/en/content/education/free_seminars.do
This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.
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