Our reliance on the internet is being highlighted in the most frustrating way by the tens of thousands of RBS and Natwest customers who have suffered from days of faulty banking services.
As a financial services company ourselves that makes almost 100% of our trades online or on mobile devices a technical glitch of such magnitude would cause no end of problems and worries for our customers, but it’s not dependence on the internet that is so worrying about the debacle, it is banking itself.
As if banks hadn’t had enough bad PR in the past few years the last few days have really put their customers resolve severely to the test. The payments system has always been part of our everyday life as salaries, bills and mortgages all need to be paid on time to keep the wheels turning, but the back log of hundreds of thousands of transactions that this must have caused doesn’t warrant thinking about. What didn’t help matters either was the weekend openings, with branches opening on Sunday for their first time in history, yet staff were unable to help customers due to the computer systems having frozen up.
Unfortunately for RBS the damage is irreparable for the customers that they will lose as a result and the problems will only feed anti-banking rhetoric further. For the few people in this country that still don’t have a bank account they’ll be wondering what all the fuss is about.
For the markets we start the week just as we left off, in selling mode, as the crisis in Europe continues to dominate the headlines. With the new Greek Prime Minister and finance minster being incapacitated, important meetings with EU and IMF leaders to discuss the results of their election and how the country will continue to deal with its bailout package have been cancelled. The impending EU summit this week is also going to be under attended by Greek delegates, which isn’t settling for many investors’ nerves.
At the time of writing the FTSE is around 25 points lower at 5485, meanwhile the Dax is in even worse shape already down over one percentage point as equity markets signal to EU politicians, something that they’ve been doing for far too long now, that time is fast running out if there is to be a proper solution to the crisis.
Economic data today is thin on the ground and throughout the week there isn’t a huge amount for us to significantly focus on. Today at least there is new home sales from the US which can still move the markets if it’s way off expectations.
The euro climbed against the US dollar last Friday ahead of the EU summit on the back of speculation the European Central Bank will step in and announce another package of longer term loans. The gains were limited, 22 pips to 1.2570, a sign that easing the terms for collateral by the ECB was not enough and that the markets are asking for a lot more. This morning’s negativity however is hurting the single currency taking it back below 1.2500 to 1.2490 at the time of writing.
Gold interrupted a string of three straight declines, recouping $7.60 to $1571.70, as a worsening debt crisis in Europe spurs demand for precious metals as an alternative asset. However, gold prices remain under the $1600.00 mark as a deflationary environment works against it on the short term. But one could ask how long until the next round of monetary easing?
The WTI crude prices rallied back $1.65 to $79.76 a barrel driven by a slightly weaker greenback and a modest recovery in the stock markets. The bounce was assisted by tropical storm Debby threatening oil refineries on the US Gulf Coast, possibly adding a premium in the WTI crude prices, but in line with the risk aversion crude prices are dipping this morning too.