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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Another Losing Week for World Stock Markets

Stock-Markets / Financial Markets 2009 Mar 01, 2009 - 11:32 PM GMT

By: Regent_Markets

Stock-Markets It was another losing week for world stock markets, with the banks in the thick of it yet again. The Dow Jones Industrial average continued its losing streak with February closing as the sixth losing month in a row. Friday also marked the lowest closing level for the Dow since May 1997. The week started well in the UK with banks such as Barclays, Lloyds, and RBS outperforming expectations.

Financials in the UK received a boost after RBS announced a restructure that will see it ‘hive off' underperforming non-core areas.

Unfortunately the euphoria didn't last, and the moment swung against financials towards the end of the week. Lloyds confirmed its record losses incurred through HBOS on Friday, and was rewarded with a 23% drop in its share price on the day. It wasn't the £10.8 bn loss that caused the deluge as that is old news. What concerned most investors was the speed of the decline in the HBOS loan book, and what this will mean when the banks come to report on next year's earnings.

On Friday last week, US 4th Quarter GDP was revised down to -6.2%, the worse quarterly showing of a century. US markets revisited their recent lows with
the S&P 500 breaching the November lows. In some ways, the worrying part of today's sell off, is that it is in part due to US GDP being revised down more than expected. Like UK banks, this implies that analysts weren't being pessimistic enough, and may not be so, even now.

The global economy is in decline and the news will continue to be negative for some time. Markets know this already, the crucial point is, how much of the
slide is already priced into equity valuations. Optimists hope that it already is, so when the news flow comes, it will have limited impact. The pessimists will point to the fact that so far the economic slump has continued to accelerate quicker than many people predicted just 3 months ago. Gold is normally seen as a safe haven in troubled times, but last week the precious metal retreated further from the $1,000 level to close the week at $941.72. Oil fared slightly better, closing the week at just below $40 a barrel.

The coming week's economic calendar is dominated by interest rate decisions and the accompanying policy statements. On Tuesday, the bank of Canada is
expected to cut rates to 0.5% from 1% and the MPC is expected to follow with exactly the same moves on Thursday. The ECB still have one of the highest
rates in the west, but they too are expected to cut rates by 0.5% down to 1.5%. Aside from this, Wednesday's ADP employment change and Friday's non
farm payroll could make this a volatile week.

This volatility could make a One Touch trade the more attractive option. The EUR/ USD was range bound for most of last week, so may be due a breakout,
especially considering the packed economic calendar for the coming week.

A One Touch trade at BetOnMarkets predicting that EUR/ USD will touch 1.2500 at any point in the next 5 days could return 67%.

By Mike Wright
Tel: +448003762737
Url: &

About Regent Markets Group:   Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, and, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world. Tel  (+44) 08000 326 279

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

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