News and Views: 4 August, 2008

US stocks followed European stocks by falling on Friday, when General Motors released report of a $15.5 billion quarterly loss

Indices:

European markets:

Stocks in Europe fell at the end of the week on Friday, there were sharp falls in mining stocks and metal prices. Even automakers remained low after BMW & GM announced massive losses. The jobless rate rose to 5.7% from 5.5% in June. Jean Marc Lucas, economist at BNP Paribas, in Paris said: "The data is in line with what we saw in the previous months...the job losses are slightly lower than what we saw earlier this year, but the unemployment rate is getting worse. It confirms that the job market is deteriorating, and there is no reason to believe that the trend will change over the next few months, even over the next few quarters." (source: reuters.com).

The German Dax slumped 83 points to 6,396 and the French CAC finished down 78 points to 4,314. (source: sharecast.com).

US markets:

US stocks followed European stocks by falling on Friday, when General Motors released report of a $15.5 billion quarterly loss. Added to that, oil prices rose, bringing back fears that economy could slip into recession and corporate earnings are at a risk. Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co in Oregon, said:"The stock market is down because oil went back up," said Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "We have more market tension with oil than with the employment report." (source: reuters.com).

The Dow Jones fell 51 points to 11,326, the Nasdaq dropped 14 points to 2,310 and the S&P 500 shed 7 points to 1,260. (source: sharecast.com).

Asian markets:

Asian markets were no different from European and US markets. Nikkei fell after NEC's shares fell after quarterly reports said profit halved and financials declined too. Whereas, the Hang Seng saw a positive growth , shrugging off weaker economic data from US, ad China's President Hu Jintao, committed on country's rapid economic growth. (source: sharecast.com).

The benchmark Nikkei 225 lost 282 points to 13,094, the lowest close for nearly two weeks. Hong Kong's Hang Seng turned positive in late trading, closing 131 points higher at 22,862. (source: sharecast.com).

Currencies:

The dollar despite remaining lower took the opportunity to recover some of its earlier losses, as oil prices declined further. The US currency was low against the euro and yen as the market reacted to weaker than expected GDP report and an unexpected jump in unemployment claims. Sterling too fell weak against the euro as economic data showed grim prospects of the UK economy and record low consumer confidence and falling house prices. But Sterling rose against the dollar after US jobless claims rose. (source: sharecast.com).

Commodities:

Oil:

On Friday, oil was moved lower but  later remained a little ahead after Deputy Prime Minister of Israel  indicated that  Iran stop its uranium enrichment. (source: sharecast.com).

A barrel of oil slipped $1.02 to $125.10. (source: sharecast.com).

Gold: 

Gold closed lower as dollar rose a bit and a better than expected economic data prompted investors to switch from the precious metal. (source: sharecast.com).

Gold December delivery fell $5.20 to close at $917.50 an ounce. (source: sharecast.com).

Bonds:  

Yields move inversely to bond prices

US Treasuries:

Bonds remained unchanged on Friday after unemployment rate report showed a rise and manufacturing may see tougher times ahead for the economy, which may trigger the Federal Reserve to not touch the interest rates. James Swanson, portfolio manager at MFS Investment Management in Boston said: "We are at the threshold of a recession, but we are not quite there yet." (source: reuters.com)

The benchmark 10-year Treasury yield was last at 3.95 percent. (source:reuters.com).

European Bonds:

The Purchasing manager's index (PMI) fell to its worst level in Europe. But the bonds remained steady. (source: sharecast.com).

The yield on Germany’s benchmark 10-year bund fell by 2 basis points 4.37%. (source: sharecast.com).

Economic Calendar - 4 August 2008:

12:30pm  Core Personal Consumption Expenditure (MoM) (Jun) - United States: The Core Personal Consumption Expenditure released by the US Bureau of Economic Analysis is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products such as food and energy in order to capture an accurate calculation of the expenditure. It is a significant indicator of inflation. A high reading is bullish for the USD, while a low reading is bearish. Previous rate was 0.1%. (High volatility expected).

12:30pm Core Personal Consumption Expenditure (YoY) (Jun) - United States : The Core Personal Consumption Expenditure released by the US Bureau of Economic Analysis is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products such as food and energy in order to capture an accurate calculation of the expenditure. It is a significant indicator of inflation. A high reading is bullish for the USD, while a low reading is bearish. Previous rate was 2.1%. (High volatility expected).

12:30pm Personal Income (MoM) (Jun) - United States : The Personal Income released by the Bureau of Economic Analysis, Department of Commerce measures the total income received by individuals, from all sources including wages and salaries, interest, dividends, rent, workers' compensation, proprietors' earnings, and transfer payments. This figure can provide insight on the US employment situation. A high reading is positive for the USD, whereas a low reading is negative. Previous rate was 1.9%. (High volatility expected).

12:30pm Perosnal Spending (Jun) - United States : The Personal Spending released by the Bureau of Economic Analysis, Department of Commerce is an indicator that measures the total expenditure by individuals. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth: While the Personal spending stimulates inflationary pressures, it could lead to rise interest rates. A high reading is positive (or Bullish) for the USD. Previous rate was 0.8. (High 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.)