News and Views: 18 August, 2008

Markets in US rose higher helped by a strong dollar and continuous fall in commodities

Indices:

European markets:

On Friday, markets in Europe rose higher after a very volatile day. Banks moved ahead with BNP Paribas, UBS and Commerzbank among the best performers in the sector. (source: sharecast.com).

The German Dax closed 3 points higher at 6,446, the French CAC gained 32 points to 4,45. (source: sharecast.com).

US markets:

Markets in US rose higher helped by a strong dollar and continuous fall in commodities. (source: sharecast.com).

Across the markets, the Dow Jones rose 43 points to close at 11,659 with the Nasdaq down a point to 2,452. The S&P 500 increased 5 points to 1,298. (source: sharecast.com).

Asian markets:

Japanese market rose on Friday, with yen's weakness over dollar giving boost to exporters. But Hong Kong moved lower as oil and mining stocks retreated in line with softer commodity prices. (source: sharecast.com).

The Nikkei 225 index closed 62 points higher at 13,019. The Hang Seng index fell 232 to 21,160. (source: sharecast.com).

Currencies:

Dollar rose on Friday as traders accepted US manufacturing report for August while euro zone and other global data disappointed. (source: sharecast.com).

Commodities:

Oil:

Oil prices have declined since the start of the month due to broad commodity sell-off according to analysts. Slowing US economy and declining oil prices have dampered overall oil demand. (source: sharecast.com).

Crude for September delivery fell $1.24 to close at $113.77 a barrel on the New York Mercantile Exchange. (source: sharecast.com).

Gold: 

Gold has also been on a decline like oil due to broad commodities sell-off. (source: sharecast.com).

Among precious metals gold for December delivery fell $22.40 to close at $792.10 an ounce. (source: sharecast.com).

Bonds:  

Yields move inversely to bond prices

US Treasuries:

With fears of slowing economy and falling energy prices, investors moved towards government bonds on Friday taking yields lower. Chris Rupkey, chief financial economist at Bank of Tokyo, said: "Bond investors believe the worldwide commodity price boom is at an end as the prospects for growth outside the U.S. start to dim. If the economy is weakening, then bonds are always the place to be and investors are jumping into the bond market with both feet today." (source: reuters.com).

Ten-year Treasury yield was 3.85 percent. (source: reuters.com).

European Bonds:

A grim economic report of the 15 European countries using euro was released on 14th August, raising speculation of a rate cut took bonds higher. Many European countries were on holiday yesterday due to Assumption Day. (source: sharcast.com).

The yield on Germany’s 10-year bund was down two basis points at 4.54%. (source:sharecast.com).

Economic Calendar - 18 August 2008:

09:00am  Trade Balance (Jun) - European Monetary Union: The Trade Balance released by the Eurostat is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the EUR. If a steady demand in exchange for exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the EUR. Previous Rate was -1.5B Euro. (Low volatility expected).

17:00pm NAHB Housing Market Index (Aug) - United States : NAHB Housing Market Index is released by the National Association of Home Builders. It presents home sales and expected home buildings in the future indicating housing market trend in the United States. The growth rate of the housing market affects the USD volatility. A high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish). Previous rate was 16. (Low volatility expected).

Recent Market Action:

Sources include: Bloomberg.com , Reuters.com, Fxstreet.com and FT.com

(Any opinions expressed in these updates do not reflect the views of the company, and as such should not be taken as trading advice.)