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News and Views: 18 November, 2008Indices:European markets:At the start of the week, European markets continued to decline as investors feared the mounting concern of global recession along with an announcement by Citigroup that it will be cutting about 50,000 jobs taking it's stocks lower. Andrew Bell, head of research at Rensburg Sheppards, said: "It's very difficult for the market to rally in the face of a big deceleration in earnings and GDP estimates. The markets can't yet see a bottom for earnings estimates or for the economy and therefore it's either going to thrash about in a rather nervous trading range or it is going to find new lows." (source: reuters.com). The U.K.'s FTSE 100 slipped 2.7 percent. Germany's DAX sank 3.3 percent as did France's CAC 40. (source: bloomberg.com). US markets:Stocks in US remained lower as investors were devastated by Citigroup's decision to cut 52,000 jobs. Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said: "You’re going to continue to get barraged with bad economic data. Earnings have hit a wall or fallen off a cliff in a lot of cases. You’re not likely to see much help from this front for a while.” (source: bloomberg.com). The Dow Jones industrial average fell 223.81 points, or 2.63 percent, at 8,273.50. The Standard & Poor's 500 Index slipped 22.55 points, or 2.58 percent, at 850.74. The Nasdaq Composite Index edged down 34.80 points, or 2.29 percent, at 1,482.05. (source: reuters.com). Asian markets:Markets in Asia however gained on Monday as there was hope of a stimulus plan in China along with rise in airline shares. Khiem Do, head of Asian multi-asset at Baring Asset Management in Hong Kong, said: "The A-share market has been holding up reasonably well over the past few days, and for good reason. They [authorities] have the ammunition to use to help growth to hit their implicit target of about 8 per cent GDP growth. There is the political expedience and administrative efficiency to do so.” (source: ft.com). The benchmark Hang Seng Index unofficially closed down 54.97 points at 13,487.69. (source: reuters.com). Currencies:On Monday, traders bought sterling taking it higher against the dollar and the euro. Many analysts felt that pound's price was unestimated due to Bank of England's move to cut interest rates to save UK's economy slipping into recession. Adam Cole at RBC Capital Markets said: "It just seems as if the pound’s sell-off has become very extended. If that were the case, the pound could rally aggressively just like the dollar did earlier in the year after the Federal Reserve cut interest rates.” (source: ft.com). By midday in New York, the pound rose 2.4 per cent to $1.4994 against the dollar, climbed 1.4 per cent to £0.8434 against the euro and gained 3.1 per cent to Y144.82 against the yen. (source: ft.com). Commodities:Oil:Monday oil prices fell as UBS warned of deteriorating commodities environment, as there is global recession in commodities too. UBS said: "Given the expansion phase in credit lasted for many years, we find it difficult to envisage that the contraction in credit availability and associated demand correction will be a short-lived process." (source: ft.com). ICE January Brent lost 36 cents to $53.88 a barrel, after touching a low of $52.84. (source: ft.com). Gold:Gold prices also slipped yesterday with a strong dollar and lower oil prices. Dan Smith, analyst at Standard Chartered said: "We are quite bullish for gold in the long term, primarily because we see the dollar weakening substantially on all this liquidity being pumped into the system." (source: reuters.com). Spot gold was down at $735.35/738.35 an ounce at 1603 GMT. (source: reuters.com). Bonds:Yields move inversely to bond prices US Treasuries:With stocks on a downward trend due to global recession fears, government bonds found favour with investors. Marty Mitchell, head of government bond trading at Stifel Nicolaus & Co. in Maryland said: "We see a lot of negative expectations so the data should be supportive of Treasury prices throughout the week. The strength in bonds was concentrated on the long-end and the yield curve saw a bullish flattening move with the front-end struggling to make new gains against a 1 percent fed funds target even though the economy continues to weaken." (source: reuters.com). The yield on the 10 year benchmark note fell to 3.70 percent. (source: reuters.com). European Bonds:Decline in stocks gave bonds the much needed importance of being safe haven assets. In a report, Jan Loeys, global head of market strategy in London at JPMorgan Chase & Co., wrote:"Government bonds continue to grind up, in line with further downside surprises in activity data and revisions in growth and interest-rate forecasts across much of the world. We remain bullish.'' (source: bloomberg.com). The yield on the 10-year German bund, Europe's benchmark government security, was little changed at 3.66 percent. (source: bloomberg.com).
Economic Calendar - 18 November 2008:09.30am Retail Price Index (MoM)(Oct) - UK: The Retail Price Index released by the National Statistics is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is widely considered as a key measure of inflation that indicates an accurate reflection of the cost of living. A high reading is seen as positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish). Previous Rate: 0.6%. Consensus Rate: 0.1%. (High volatility expected). 13.30pm Producer Price Index (MoM) (Oct) - US : The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. A high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish). Previous Rate: -0.4%. Consensus Rate: -1.8%. (Medium volatiity expected).
Recent Market Action:
(percent changes based on previous day underlying market data for indication only) 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.) 
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