The FTSE100 Index was seen climbing shortly after experiencing sharp downward trends in the previous sessions. The FTSE Index was bouyed mostly with the news from Royal Bank of Scotland after its half yearly results seemed comforting for investors in the light of the scandals that have plagued the UK’s banking sector.
Soon into the day’s trading session, the FTSE100 was up by 45.13 points after yesterday’s ECB press conference which failed to impress the markets.
The RBS was seen rallying at 4.7% after previous sessons saw huge drops after the company posted their half yearly figures with operating profits of £1.83 billion, which was lower in comparison to previous year’s £1.97 billion. The numbers however managed to meet investor expectations.
The part nationalized bank with 82% owned by the government confirmed the job layoffs as part of the LIBOR investigation scandal that had affected RBS along with many other banks which are being investigated by both US and UK regulators.
Government officials are also considering another possibility of buying out the private investors stake in the company in order to completely nationalize the bank as frustration increases at the bank’s failure to lend money to British businesses. The move, if approved could cost the government about £5 billion in order to buyout the remaining 18% stake in the bank.
Critics that oppose this move comment that a complete nationalization of RBS might not be logical as it would saddle the UK taxpayer with more risks in the event the bank is nationalized.
However, looking forward, RBS’s earnings growth will be difficult to sustain in the upcoming months. RBS shares saw a volume growth of 42.7%, a 90 day average.
Investor focus turns to the US labour market data which is due to be released at 1230GMT today. Any signs of weakness could well prompt the reluctant Federal Reserve to step in to ease the markets which has previously postponed any such quantitative easing after the US Presidential elections.
The US NFP data is expected to show 100k new jobs being added in the month of July. Previous month’s figures showed 80k jobs being added in June. The unemployment rate is expected to remain unchanged at 8.2% though.
A better than expected NFP data could well indicate a progress in the US economy, but if the data falls below market expectations, investors will be anticipating the Fed to step in.