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The Sell-off in equity markets on Friday continued uninterrupted, as the aftershock of UK Brexit, voting result affected the financial world.
In fact, the banking sector was under pressure with share prices of major U.K banks surpassing the two digit negative figures. Barclays bank shares dropped around 17% and Royal Bank of Scotland (RBS) dipping over 14%. Barclays announced that it expects negative growth in the UK in the second half of the year whilst the shares trading on RBS halted at one point due to the sharp drop in its share price. European banks were not immune to the moves in the sector as Deutsche bank, Commerzbank, BNP Paribas, Intesa Sanpaolo and UBS all lost around 5%. Furthermore, Barclays bank stated that the Bank of England is likely to decrease its interest rate from 0.5% to zero.
This scenario resulted in the 10-year gilt yield falling below 1 percent for the first time as the British based banks face serious risks. Some sort of reassurance came from the British Chancellor of the Exchequer George Osbourne, stating that the central bank of England had put “in place robust contingency plans for the immediate financial aftermath” in the event of this result.
The British pound also went on to extend Friday’s losses, as it fell to its weakest level since the mid-80s. The Sterling slumped around 4% against the US Dollar at around $1.3122. Oil was also trading lower, but the main reason was not the result of the U.K vote on Friday but mainly due to the demand in China and the recent extended gains of the U.S Dollar.
Despite this scenario, Gold was in the green again influenced by the global market conditions where investors sought to protect their wealth. Adding to this the U.S Federal Reserve also indicated it would keep the interest rates low. Growing market instability and the flight-to-safety sentiment pushes Gold price higher to limit any more market turbulences.
Corporate News
Medical Device Company, Medtronic Plc announced it has agreed to buy HeartWare International Inc for $1.1 billion. The completion of the transaction will take place by a tender offer for all outstanding common shares of HeartWare of $58 per share in cash. This is a 93% premium over the closing balance last week of $29.98. HeartWare shares traded in the red in the past year due to a decrease in sales and problems with product studies. Tracking this HeartWare shares jumped 91.78%, hitting the price of $57.5 per share.
The global Semiconductor ST Microelectronics are helping to protect smart devices with the introduction of a new software tool that guides the selection of the right protection from static charges. The many thousand volts charges are a growing threat to delicate chips in devices like smartphone, tablets, computers, etc. Exposed ports like USB or HDMI are vulnerable to these discharges. This software tool is capable of assessing both circuit protection and signal integrity, thus helping engineers to evaluate electrical performance before building the hardware.
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