News and Views: 8 August, 2008

US stocks hit a rough trading patch on Thursday, after AIG (American International Group, reported a second quarter loss of $5.36billion

Indices:

European markets:

Unlike Wednesday, Thursday was a disappointment for the European stocks as US stocks tumbled down. The European Central Bank also resisted from raising interest rates from 4.25. The ECB President, Jean-Claude Trichet conveyed that the Euro Zone economy's inflation may remain high and could also rise further. (source: sharecast.com).

The German Dax ended the day 17 points lower at 6,543, the French CAC added 9 to finish at 4,457. (source: sharecast.com).

US markets:

US stocks hit a rough trading patch on Thursday, after AIG (American International Group, reported a second quarter loss of $5.36billion. The financial sector also was no different, big names like Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers, Bank of America and JP Morgan Chase just collapsed. (source: sharecast.com).

The Dow Jones closed 224 points lower at 11,431, the Nasdaq was 22 adrift at 2,355, while the broad-based S&P 500 was down 23 at 1,266. (source: sharecast.com).

Asian markets:

The Asian counterparts also bore losses after disappointing result from Freddie Mac took financials such as Mizuho Financial and Mitsubishi UFJ lower. (source: sharecast.com).

The blue chip Nikkei 225 index closed down 129 points at 13,124. The Hang Seng index closed up 154 points at 22,104, off a low of 21,915. (source: sharecast.com).

Currencies:

In currencies, Sterling Pound suffered declines against the dollar after the Bank of England decided to hold interest rates at 5%. The euro also from losses against the dollar after the European Central Bank also did not change interest rates but indicated a further rise in inflation. (source: sharecast.com). 

Commodities:

Oil:

Crude moved higher after a long gap of four days after news of a Turkish pipeline disrupted the flow of oil. The pipeline was blasted by Kurdish separatists causing a loss of 1million barrels of oil per day, the closure can be as long as 2 weeks according to a Turkish official.  (source: sharecast.com).

A barrel of oil $1.44 to $120.22. (source: sharecast.com).

Gold: 

Despite oil's rise on Thursday, gold remain lower as dollar continued to gain against other major currencies. This showed how strong the dollar has lately become to be able to hold on to its price despite oil rise. (source: sharecast.com).

Gold futures for December delivery fell $5.10 to $877.90 an ounce. (source: sharecast.com).

Bonds:  

Yields move inversely to bond prices

US Treasuries:

US Treasury notes for longer periods were strong on Thursday after very good auction of 30 year bond brought back the bond charm. The 30 year bonds raked in $10billion and 10 year bonds brought in $17billion on Wednesday. Kevin Flanagan, fixed income strategist for global wealth management in New York at Morgan Stanley, said:"Maybe the market is just saying, Hey, we just took down a boat-load of supply and we are none the worse for it." Sliding stocks also revived investor's appetite for safe haven government bonds, according to traders. (source: reuters.com).

The 30-year Treasury bond's yield declined to 4.55 percent. (source: reuters.com).

European Bonds:

German bund saw a fall at the start on Thursday amidst speculation that the ECB may raise interest rates despite the ECB President's comments that he is concerned about the possibility of a recession rather than inflation. (source: sharecast.com).

The yield on Germany’s benchmark 10-year bund rose by a basis point to 3.94%. (source: sharecast.com).

Economic Calendar - 8 August 2008:

11:00am  Net Change in Employment (Jul) - Canada: The employment Change released by the Statistics Canada is a measure of the change in the number of employed people in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive, or bullish for the CAD, while a low reading is seen as negative or bearish. Previous rate was -5K. (Medium volatility expected).

11:00am Unemployment Rate (Jul) : The Unemployment Rate released by the Statistics Canada is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the Australian Economy. If the rate is up, it indicates a lack of expansion within the Canadian lobar market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the CAD, while an increase is seen as negative or bearish. Previous rate was 6.2%. (Medium 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.)