Uncertainty and weak data weigh on markets
Another day of uncertainty surrounding the US government's $700 billion financial rescue plan coupled with the worsening global economy weighed on markets yesterday.
European stocks which had been in positive territory were dragged down by Wall Street stocks as investors fell prey to the concerns enveloping US markets. The FTSE100 lost ground in afternoon trading to post a 1.8% decline, the Dow and S&P500 finished 3.2% and 4% lower respectively.
It would appear that market participants are becoming cautious that even if the bailout bill is passed, it may do little to affect the rapidly weakening global outlook.
Republican leaders are currently attempting to persuade their party members to back the rescue package before it is put to vote in the House again this Friday. While the democrat party may be reluctant to take the bill before lawmakers unless they are sure of success. However, recent comments would suggest that there is more chance of the bill being passed than not.
The first data release from the US showed there was no change in the direction of US jobless claims, which increased to 497k from the previous weeks 496k. This is the highest level in seven years and offers an indication of how the financial turmoil is hitting the real economy.
Lower than expected factory orders also signalled that the US economy is grinding to a halt as businesses pullback spending. The 4% drop for August was the most in almost two years.
The European producer price index provided more evidence that inflationary pressures are easing in the euro zone. Prices rose 8.5% in August from a year earlier, compared to last months 9% increase and the monthly figure dropped 0.5%.
Data from Nationwide illustrated the largest decline in UK house prices since the survey began in 1991. The year on year number came in at -12.4% and the monthly number at -1.7%.
After the European Central Bank announced their decision yesterday to keep the benchmark rate at 4.25%, Trichet said that the financial market turmoil is dampening economic growth and inflation risks have diminished. Having taken a while, it appears that the governing council has finally changed sentiment and it could be suggested that this is a clear sign that a rate cut is in the pipeline. Possibly before year end.
Trichet's comments helped the euro to a 13 month low against the dollar, declining for a fourth consecutive day against the greenback. The pound looks to be heading for a 4 percent drop against the dollar this week. Sterling is little changed against the euro.
Crude oil continued its fall yesterday. The November Nymex futures contract has declined 13 percent so far this week and it is difficult to see any upside given the likely slowing in demand as the US flirts with recession.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
European stocks which had been in positive territory were dragged down by Wall Street stocks as investors fell prey to the concerns enveloping US markets. The FTSE100 lost ground in afternoon trading to post a 1.8% decline, the Dow and S&P500 finished 3.2% and 4% lower respectively.
It would appear that market participants are becoming cautious that even if the bailout bill is passed, it may do little to affect the rapidly weakening global outlook.
Republican leaders are currently attempting to persuade their party members to back the rescue package before it is put to vote in the House again this Friday. While the democrat party may be reluctant to take the bill before lawmakers unless they are sure of success. However, recent comments would suggest that there is more chance of the bill being passed than not.
The first data release from the US showed there was no change in the direction of US jobless claims, which increased to 497k from the previous weeks 496k. This is the highest level in seven years and offers an indication of how the financial turmoil is hitting the real economy.
Lower than expected factory orders also signalled that the US economy is grinding to a halt as businesses pullback spending. The 4% drop for August was the most in almost two years.
The European producer price index provided more evidence that inflationary pressures are easing in the euro zone. Prices rose 8.5% in August from a year earlier, compared to last months 9% increase and the monthly figure dropped 0.5%.
Data from Nationwide illustrated the largest decline in UK house prices since the survey began in 1991. The year on year number came in at -12.4% and the monthly number at -1.7%.
After the European Central Bank announced their decision yesterday to keep the benchmark rate at 4.25%, Trichet said that the financial market turmoil is dampening economic growth and inflation risks have diminished. Having taken a while, it appears that the governing council has finally changed sentiment and it could be suggested that this is a clear sign that a rate cut is in the pipeline. Possibly before year end.
Trichet's comments helped the euro to a 13 month low against the dollar, declining for a fourth consecutive day against the greenback. The pound looks to be heading for a 4 percent drop against the dollar this week. Sterling is little changed against the euro.
Crude oil continued its fall yesterday. The November Nymex futures contract has declined 13 percent so far this week and it is difficult to see any upside given the likely slowing in demand as the US flirts with recession.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: credit crunch, ECB, house price falls, interest rates, Oil, unemployment
posted by Dr Search- Principal Consultant at the Search Clinic @ 10:05 AM
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