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EU Indices treading water on Martin Luther King day

Article By: ,  Financial Analyst
January 17, 2011 4:54 PM

European Indices traded without direction on Monday as US markets took the day off for Martin Luther King day and investors treaded water in Europe keeping a watchful eye on developments from a meeting of EU Ministers.

Most Indices across Europe traded mostly between small gains and losses throughout the day with little ground made on either side of the coin. There has been no economic data or corporate earnings of any real significance and so most equity moves has been in reaction to the key news stories that are out there.

The day in Europe has been dominated by a few major headlines:

EU Finance Minister’s meeting
There has been a degree of watchful hesitation in the markets today with investors monitoring closely any action on combating Europe’s sovereign debt problems from a meeting of EU finance ministers. There had been a notable increase in speculation that there could be a top up to theEFSF (European Financial Stability Fund) but it seems recent murmurs out of the EU pits Germany firmly against that option and so any hopes for a top up has been dashed a bit over the last 48 hours. The result has been for investors to sell out of the Euro, an action that was speeded by comments from ECB policymaker Mr Orphanides who appeared to quash expectations that theECB had turned more hawkish.

Apple’s Steve Jobs takes medical leave of absence
Apple’s shares traded lower by 7% in Frankfurt today and are expected to open lower when US trading resumes on Tuesday after news that Apple’s CEO Steve Jobs will take a leave of absence for medical reasons. The news came as a complete shock to the markets and one would hope that this is not a sign that Mr Job’s previous health problems, when he suffered from pancreatic cancer and took a six month leave of absence, has not returned. His absence this time round, whilst unlikely to fundamentally affect Apple’s operations, is a big loss to the tech innovator and its shares have suffered with the temporary absence of the firms commander in chief. Shareholders may however get a fantastic reminder of just how profitable the firm is under Steve Job’s leadership tomorrow when the company announces its quarterly earnings.

Smiths Group tops FTSE leader board whilst GlaxoSmithKline slumps on £2.2bn liability charge
Shares in Smiths Group rallied at one point as much as 11% before falling back to gains of 8% on the day after the firm received a $3.6bn bid for its medical unit, Smiths Medical. The rejected offer has given rise to speculation that the firm is willing to sell and may get much more than the $3.6bn it has rejected.

GlaxoSmithKline shares however slumped 2% on the day after the pharmaceutical giant took a £2.2bn hit in liability costs for the fourth quarter on its controversial diabetes drug Avandia, which has been linked to heart attacks. The firms shares touched below £12 today, a new four month low, on the news, which may not have come to many as a surprise but still takes a huge chunk of earnings from the company.

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