by Raymond Chatlani
This morning, Asian stocks flipped back into the red after Euro zone finance ministers at the weekend postponed a final decision on extending a further $17 billion in emergency loans to Greece, ratcheting up pressure on Athens to first impose harsh austerity measures. Greece will get the next euro12 billion of its existing euro110 billion bailout package in early July, but only if it manages to pass euro28 billion in new spending cuts and economic reforms by the end of the month, said Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the regular meetings of the 17 eurozone finance ministers. European stockmarkets fell as the postponement of a final decision on extending £10.6billion (€12bn) in emergency loans to Greece spooked investors across the world. Wall Street rose as the latest development to reduce Greece's debt helped draw buyers and the S&P 500 touched a key support level, but anemic volume signalled the recent weakness may not be over.
On Tuesday, Asian stockmarkets all rose except for China as Chinese banks faltered on fears of further tightening by the Chinese Central Bank. European indices rose at their fastest pace in two months, bouncing from three-month closing lows on optimism that Greece will get the financial support to avoid defaulting next month. US markets for a fourth day straight on hopes that a vote of confidence in the Greek government will help the country avoid a default.
On Wednesday, Asian stockmarkets jumped after Greece's embattled prime minister won a confidence vote, taking him one step closer to pushing through austerity measures and avoiding a default, although in Shanghai, concerns over a widely expected interest rate hike tempered gains, with the bourse adding just 0.03 percent. European markets were down modestly as Greek Prime Minister George Papandreou attempted to introduce further cuts to the budget in order for the country to receive its latest 12 billion euro bailout. US indices dropped after the Federal Reserve acknowledged the sluggish pace of the U.S. economic recovery without hinting at further plans for stimulus.
On Thursday, Asian stockmarkets fell with investors reluctant to buy riskier assets ahead of a European leaders meeting which could be dominated by talk of Greece's debt crisis, and after the Federal Reserve cut its growth forecasts for this year and next. European shares fell to a fresh three-month closing low, as higher-than-expected weekly U.S. jobless claims intensified doubts about the strength of the recovery in the world's biggest economy. Greece's debt crisis also hurt sentiment. U.S. stocks closed way off session lows on Thursday on news Greece agreed to a five-year austerity plan, but lingering economic uncertainty ultimately drove the S&P 500 lower, keeping a downward trend in place. Greece won the consent of a team of European Union and International Monetary Fund inspectors for its new five-year austerity plan after committing to an additional round of tax increases and spending cuts
On Friday, Asian stockmarkets rocketed higher as Greece's deal with international lenders for a new austerity plan offered investors a rare piece of good news in a week filled with gloomy economic data.
The Greek government survived the confidence vote allowing the markets a brief bounce but a clear resolution has yet to materialise. European indices rose on Greek hopes but gave up all gains at the close as trading was halted in two italian banks.
Italian banks UniCredit and Intesa Sanpaolo fell 5.5 and 4.3 percent respectively, as worries circulated about their capital positions and the deepening euro zone crisis. UniCredit hit a two-year low. Both stocks were suspended for part of the session, due to the sharp movements, but their volumes were still above their respective 30-day averages. US markets fell after a brief suspension in the trading of some big Italian banks raised new concerns about the European debt crisis, though better-than-expected durable goods orders kept losses limited.
This morning, Asian equities slipped and the US Dollar rose, with investors positioning their portfolios ahead of a Greek vote on unpopular fiscal austerity measures this week and a gauge of U.S. factory activity that is expected to show slowing growth.
Last week the US Dollar rose and commodities and global markets fell. Since late April, reports on manufacturing, retail sales, home sales and other economic indicators have come in weaker than economists anticipated. Europe's debt problems and a slowing growth rate in China have also raised concerns about the global economy. With the daily volatility and downbeat sentiment coming from all angles investors are running scared.
To summarise, all these events reported last week are weighing on the markets:-
On Wednesday, Federal Reserve Chairman Ben Bernanke said problems plaguing the U.S. economy may last longer than previously thought. He also warned that the economy is weaker than previously forecast, and lowered this year's gross domestic product growth estimate to 2.9 percent from 3.3 percent.
On Thursday, Greece's new finance minister sought to explain gaps in his austerity plan to EU and IMF officials, with European leaders insisting on deep spending cuts and tax hikes if Athens wants to secure funds and avoid potential default.
The euro tumbled on Thursday, and the dollar's gain, partly on a "flight to safety" was one factor pulling down metals and crude prices.
Meanwhile, in the US the continued rise in first-time claims for unemployment benefits indicated little improvement in the job market since May, when there was a drop in the number of new jobs created. New applications for unemployment benefits rose to 429,000 last week, from 420,000 the week before.
Finally, fears that the Chinese will raise interest rates in the face of a slowing economy and worries about the weak capital positions of Italian banks continues to bother investors.
This week markets will be mainly driven by the following two events.
Athens will vote on Wednesday the framework austerity package on tax increases and spending cuts, and then on its implementation on Thursday. It is critical for the country to pass the package to secure funding from international lenders to avert a sovereign default.
The U.S. Institute for Supply Management is expected to release on Friday data showing a slower rate of growth for factory activity in June after it grew at its slowest pace in May since September 2009.
Monday, June 27, 2011
Monday, June 20, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, Asian stocks weakened on renewed worries over the global economy and concern that protracted wrangling in the euro zone could delay a solution to Greece's debt crisis. European markets rebounded modestly as investors sought out bargains and reacted to takeover and jobs speculation after sharp losses before the weekend. US stockmarkets closed flat on corporate deals and the latest downgrade on Greek debt. The Greek government's efforts to pull its economy out of crisis have been dealt a massive blow as its debt rating has been slashed to CCC now only two notches away from Standard & Poor's (S&P) benchmark default rating.
On Tuesday, Asian stockmarkets all rose as Chinese inflation figures and industrial output provided some relief that the world's second biggest economy would not have to aggressively increase monetary tightening, boosting appetite for risky assets. European and US markets rose, boosted by positive Chinese data. Also US May producer prices rose as anticipated and retail sales showed a milder-than-expected decline.
On Wednesday, Asian stockmarkets initially rose as positive data from the world's two largest economies encouraged investors to buy back into growth-sensitive assets, but closed mixed on concern about the global outlook and the Greek debt crisis after EU ministers failed to seal a deal on Greece, prompting a move away from riskier assets which helped gold extend gains. European indexes fell on renewed concerns over Greece's debt crisis and contagion fears. US markets fell on worries the Greece debt crisis may escalate and after a negative reading on New York State manufacturing underscoring the headwinds facing the economy. The New York Federal Reserve's Empire State manufacturing index, an early indicator of U.S. factory conditions, unexpectedly contracted in June, falling below zero for the first time since November.
On Thursday, Asian stockmarkets got hammered as Greek debt troubles deepened as Euro zone officials said a new three-year financing program for Greece may be delayed until next month due to differences over how to involve private investors and also on fears of a US slowdown on poor economic data. European indices fell sharply as worries about Greek's debt troubles worsened and investors feared contagion, reflected in Spain's debt auction. Us markets rose as fewer Americans applied for unemployment benefits last week, though applications remained above levels consistent with a healthy economy and housing starts and permits for future construction rose in May, signs that offered some hope the economy could soon pull out of its soft patch.
On Friday, Asian stockmarkets fell despite positive economic data out of the U.S., as a political shake-up in Greece added to worries that the country might be forced to default on its debt. European markets slipped with markets still largely unconvinced that Greece can dodge a default without political stability in Athens, keeping equity and commodity prices in a near-term downtrend but reversed and closed in positive territory when investors were reassured by a Franco-German summit on the Greek debt crisis. US indices rose after French President Nicolas Sarkozy hinted at a deal to resolve the Greek debt crisis that has hampered equities and worried investors over a possible credit dry-up.
This morning, Asian stocks flipped back into the red after Euro zone finance ministers at the weekend postponed a final decision on extending a further $17 billion in emergency loans to Greece, ratcheting up pressure on Athens to first impose harsh austerity measures. Greece will get the next euro12 billion of its existing euro110 billion bailout package in early July, but only if it manages to pass euro28 billion in new spending cuts and economic reforms by the end of the month, said Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the regular meetings of the 17 eurozone finance ministers.
World stocks fell for a seventh straight week over concerns over slowdowns in the United States and China and the euro zone debt problems. In the USA, retail sales are down, jobless claims are up, and housing has flatlined. In China, inflation is still higher than the Chinese Central Bank's target of 4 percent per annum and investors fear that interest rates will have to continue to increase although Chinese May 2011 inflation figures and industrial output provided some relief that the world's second biggest economy may not have to aggressively increase monetary tightening. The Greek debt crisis could spread to other EU nations such as Ireland, Portugal, Spain and Italy.
A slew of data showing the United States is on the verge of a slowdown has already done its damage to the market. After the heavy selling of the past several weeks, it seems investors are taking a wait-and-see approach -- for now. On Wednesday, Bernanke is to give his views on the economy and any hint that bond repurchase programme will continue may help markets to rebound
On Monday, Asian stocks weakened on renewed worries over the global economy and concern that protracted wrangling in the euro zone could delay a solution to Greece's debt crisis. European markets rebounded modestly as investors sought out bargains and reacted to takeover and jobs speculation after sharp losses before the weekend. US stockmarkets closed flat on corporate deals and the latest downgrade on Greek debt. The Greek government's efforts to pull its economy out of crisis have been dealt a massive blow as its debt rating has been slashed to CCC now only two notches away from Standard & Poor's (S&P) benchmark default rating.
On Tuesday, Asian stockmarkets all rose as Chinese inflation figures and industrial output provided some relief that the world's second biggest economy would not have to aggressively increase monetary tightening, boosting appetite for risky assets. European and US markets rose, boosted by positive Chinese data. Also US May producer prices rose as anticipated and retail sales showed a milder-than-expected decline.
On Wednesday, Asian stockmarkets initially rose as positive data from the world's two largest economies encouraged investors to buy back into growth-sensitive assets, but closed mixed on concern about the global outlook and the Greek debt crisis after EU ministers failed to seal a deal on Greece, prompting a move away from riskier assets which helped gold extend gains. European indexes fell on renewed concerns over Greece's debt crisis and contagion fears. US markets fell on worries the Greece debt crisis may escalate and after a negative reading on New York State manufacturing underscoring the headwinds facing the economy. The New York Federal Reserve's Empire State manufacturing index, an early indicator of U.S. factory conditions, unexpectedly contracted in June, falling below zero for the first time since November.
On Thursday, Asian stockmarkets got hammered as Greek debt troubles deepened as Euro zone officials said a new three-year financing program for Greece may be delayed until next month due to differences over how to involve private investors and also on fears of a US slowdown on poor economic data. European indices fell sharply as worries about Greek's debt troubles worsened and investors feared contagion, reflected in Spain's debt auction. Us markets rose as fewer Americans applied for unemployment benefits last week, though applications remained above levels consistent with a healthy economy and housing starts and permits for future construction rose in May, signs that offered some hope the economy could soon pull out of its soft patch.
On Friday, Asian stockmarkets fell despite positive economic data out of the U.S., as a political shake-up in Greece added to worries that the country might be forced to default on its debt. European markets slipped with markets still largely unconvinced that Greece can dodge a default without political stability in Athens, keeping equity and commodity prices in a near-term downtrend but reversed and closed in positive territory when investors were reassured by a Franco-German summit on the Greek debt crisis. US indices rose after French President Nicolas Sarkozy hinted at a deal to resolve the Greek debt crisis that has hampered equities and worried investors over a possible credit dry-up.
This morning, Asian stocks flipped back into the red after Euro zone finance ministers at the weekend postponed a final decision on extending a further $17 billion in emergency loans to Greece, ratcheting up pressure on Athens to first impose harsh austerity measures. Greece will get the next euro12 billion of its existing euro110 billion bailout package in early July, but only if it manages to pass euro28 billion in new spending cuts and economic reforms by the end of the month, said Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the regular meetings of the 17 eurozone finance ministers.
World stocks fell for a seventh straight week over concerns over slowdowns in the United States and China and the euro zone debt problems. In the USA, retail sales are down, jobless claims are up, and housing has flatlined. In China, inflation is still higher than the Chinese Central Bank's target of 4 percent per annum and investors fear that interest rates will have to continue to increase although Chinese May 2011 inflation figures and industrial output provided some relief that the world's second biggest economy may not have to aggressively increase monetary tightening. The Greek debt crisis could spread to other EU nations such as Ireland, Portugal, Spain and Italy.
A slew of data showing the United States is on the verge of a slowdown has already done its damage to the market. After the heavy selling of the past several weeks, it seems investors are taking a wait-and-see approach -- for now. On Wednesday, Bernanke is to give his views on the economy and any hint that bond repurchase programme will continue may help markets to rebound
Monday, June 6, 2011
Weekly Market Summary
By Raymond Chatlani
On Monday, Asian markets closed mixed on thin trade as the UK and US markets would be closed. European stockmarkets fell in thin trade with fears of a Greek restructuring weighing on investors.
On Tuesday, Asian stockmarkets rose on news that industrial and manufacturing activity was showing signs of rebounding after a devastating earthquake in Japan in March. European stocks rose as the euro hit a three-week high versus the dollar on a report that Germany could make concessions on efforts to put together a bailout for Greece. The European Union raced to draft a fresh bailout package for indebted Greece to release vital loans next month and avert the risk of the euro zone country defaulting. US markets rallied attributed to news of Germany leading a second bailout for Greece.
On Wednesday, Asian stocks were little changed as traders awaited manufacturing data from China. China’s manufacturing expanded at the slowest pace in nine months in May as the government extended a campaign to cool inflation and the property market. European markets fell on concerns of a slowdown in China's manufacturing growth which was further compounded by poor economic data out of the USA. US stockmarkets extended losses after a survey showed a sharp slowdown in U.S. manufacturing activity in May, adding to fears the economic recovery was faltering.
On Thursday, Asian stockmarkets fell heavily on poor US economic data on fears of slowing US growth. European markets fell on poor US economic data and worries about Greece. US stocks closed flat as as investors absorbed the latest economic data ahead of Friday's May jobs report.
On Friday, Asian stocks closed mixed before a key U.S. jobs report later in the day. European stockmarkets registered moderate gains while Greek stocks soared on positive comments from the Finance Ministry. US markets fell as employers hired only 54,000 new workers in May, the fewest in eight months, and the unemployment rate rose to 9.1 percent.
Last week Wall Street closed out a fifth week of losses with more selling on Friday after an anemic jobs report strengthened the case that the economy was slowing, though analysts said indexes may stabilize in the near-term. Earlier last week, we saw reports that US and Chinese manufacturing slowed in May. There is evidence that the U.S. economy is slowing, hampered by high gas prices and natural disasters in Japan that have hurt U.S. manufacturers. Also, the Chinese margin hikes in the banking system seems to be finally moderating economic growth which may bring down inflation in the second half of the year.
It looks like the the Chinese interest rate increases and increase of margins for their banking sector is working. In the US, economic growth is slowing and we shall probably see another stimulus package. With both unemployment and housing deteriorating in the USA, the economy cannot move forward unless the Feds continue to stimulate the economy.
On Monday, Asian markets closed mixed on thin trade as the UK and US markets would be closed. European stockmarkets fell in thin trade with fears of a Greek restructuring weighing on investors.
On Tuesday, Asian stockmarkets rose on news that industrial and manufacturing activity was showing signs of rebounding after a devastating earthquake in Japan in March. European stocks rose as the euro hit a three-week high versus the dollar on a report that Germany could make concessions on efforts to put together a bailout for Greece. The European Union raced to draft a fresh bailout package for indebted Greece to release vital loans next month and avert the risk of the euro zone country defaulting. US markets rallied attributed to news of Germany leading a second bailout for Greece.
On Wednesday, Asian stocks were little changed as traders awaited manufacturing data from China. China’s manufacturing expanded at the slowest pace in nine months in May as the government extended a campaign to cool inflation and the property market. European markets fell on concerns of a slowdown in China's manufacturing growth which was further compounded by poor economic data out of the USA. US stockmarkets extended losses after a survey showed a sharp slowdown in U.S. manufacturing activity in May, adding to fears the economic recovery was faltering.
On Thursday, Asian stockmarkets fell heavily on poor US economic data on fears of slowing US growth. European markets fell on poor US economic data and worries about Greece. US stocks closed flat as as investors absorbed the latest economic data ahead of Friday's May jobs report.
On Friday, Asian stocks closed mixed before a key U.S. jobs report later in the day. European stockmarkets registered moderate gains while Greek stocks soared on positive comments from the Finance Ministry. US markets fell as employers hired only 54,000 new workers in May, the fewest in eight months, and the unemployment rate rose to 9.1 percent.
Last week Wall Street closed out a fifth week of losses with more selling on Friday after an anemic jobs report strengthened the case that the economy was slowing, though analysts said indexes may stabilize in the near-term. Earlier last week, we saw reports that US and Chinese manufacturing slowed in May. There is evidence that the U.S. economy is slowing, hampered by high gas prices and natural disasters in Japan that have hurt U.S. manufacturers. Also, the Chinese margin hikes in the banking system seems to be finally moderating economic growth which may bring down inflation in the second half of the year.
It looks like the the Chinese interest rate increases and increase of margins for their banking sector is working. In the US, economic growth is slowing and we shall probably see another stimulus package. With both unemployment and housing deteriorating in the USA, the economy cannot move forward unless the Feds continue to stimulate the economy.
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