Wall Street: The equity rally on Wall Street backed off from four month highs after the financial sector reversed an early rally that just could not hold through a Ben Bernanke speech, and a Presidential televised update. The S&P gave back 1.7% of this year’s 35% gains ahead of the official release of the U.S. banking stress test results.
Financial Sector: In trade on Thursday the XLF, the financial sector ETF, dropped 0.36 points (2.8%) to trade at 12.12, and reversed a very positive period of trade, ahead of the Stress Test results from the U.S. banking sector. It moved lower on huge volume; 275m ETF's changed hands, above the ten day average of 175m. Without a solid period of trade from the banking sector the main equity markets are going to struggle to hold the higher ground, and although lower in trade on Thursday recent moves have increased the Financial Sector value dramatically from the test of $6 in March.
The NYSE posted loses that averaged 1.5%. The DOW finished at 8409 after a loss of 102 points (1.2%), while the S&P traded at 907, lower by 2.4%, and the technology-heavy NASDAQ traded at the 1716 area, after moving down by 43 points (2.4%).
Europe: Since investors are speculating the worst is over for the financials, the banking sector has posted strong gains over the last few trading sessions. However, not all European banks rallied this morning. The U.K. bank, Lloyds, dropped almost 10% this morning, after saying it will record a pre-tax loss this year. On the other hand, Barclays rose 4%, after announcing a profitable first quarter. On the German Dax, the auto industry posted significant gains after the merger of VW and Porsche was announced.
The European markets were mixed in trade on Thursday, and unable to spark any positive momentum. The German Dax closed at 4804 (-1.5%), the London FTSE closed at 4398 (+0.1%), and the French Cac 40 stood at 3251 with a loss of 1.4%.
Asia: Following three days of Holidays, the Japanese Nikkei soared more than 4% on Thursday. Almost every sector in the index rallied, with the financial sector on top of the list. Other important gains were observed in the commodity stocks, as crude oil surged 5% during the U.S. session, and in goods manufacturing sales, on positive U.S. employment data..
Overnight, the Japanese Nikkei moved higher by 408.33 points (4.55%) to 9,385.70. The Australian S&P/Asx gained 71.60 points (1.85%) to 3,938.70. The U.K. Ftse added 61.83 points (1.41%) to 4,458.32, while the German Dax rose 52.18 points (1.07%) to 4,932.89