Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks Seek Direction in Holiday Thinned Trading

Stock-Markets / Stock Markets 2010 May 31, 2010 - 02:07 PM GMT

By: PaddyPowerTrader

Stock-Markets

Best Financial Markets Analysis ArticleFriday looked to be a calm day after the large rise in global stock markets, Thursdays volatility had drifted lower, stocks were mixed to small better and credit spreads were tighter, but then the genius rating agency Fitch thought that the market needed a small present to liven things up, so Spain was downgraded at 17.35 BST ahead of a long liquidity drained holiday weekend in the UK and US from AAA to AA+ and this sent Dow Jones down 120 points in a few minutes.


Sure don’t get me wrong I think Fitch is right – Spain isn’t AAA anymore and haven’t traded like a AAA sovereign for many months, in fact Spain trade wider in CDS and in govt spread than many much lower rated sovereigns. Rating agencies are backward looking modelling guys, that can’t see trends coming. But it’s just their timing is as ever pants.

The problems for Spain started in 2007 and back then it was easy to see that this might cause huge changes to Spain’s property markets and banking industry, but now Spain is actually trying to reform the banking sector i.e. consolidation of Caja’s or savings banks (12 of 45 of which have begun merger talks and a 13th has been rescued by the central bank) reform the labour market in close cooperation with unions, and furthermore just announced and ratified the largest austerity plans in the countries history. I must admit that I have lost the respect for the rating agencies long ago and I don’t think I’m alone, politicians across the globe seems to be in the same camp and if the investor base would lobby for a change as well, then I think the glory days for S&P, Moodys and Fitch would be over very, very soon.

European bourses opened with a firmer tone Monday after overnight comments from the Fed’s Evans who told reporters in Seoul that “he wouldn’t be surprised “ if the Fed’s policy of keeping rates low “gets extended just a little bit” buoyed brittle sentiment. In other Fedspeak Philly Fed Presidents Plosser opined that “how the crisis in Europe ends up affecting the economy will dictate how we will respond”. The FTSE is closed today for the June bank holiday and it’s Memorial Day Stateside. Very thin today with the only notable movers beingBP (off another 8% in German trading) after the latest “top kill” attempt to plug that pesky Gulf well failed dismally.

As an aside Paddy Power is offering 6/4 thatBP chief Tony Hayward will have to fall on his sword over the fiasco.

In other moves, German carmaker Daimler is 2% better after Deutsche bank upped it’s price target for the shares fro 42 to 50. VW is up 2.5% in a parallel move

Today’s market Moving Stories

•South Korea Calls for Permanent Central-Bank Currency Swaps as Safety Net, this is a new development, that I hadn’t expected. Asian sovereigns have accumulated huge sums in FX reserves (mainly USD) to prevent pressure against their local currencies (like 1998) and South Korea just used the reserves last Tuesday to intervene in the Won after the North Korea tensions intensified. Not sure Ben Bernanke will like the idea but the longer term implications would be less demand for USD in FX markets and hence a weaker USD.
•During a TV interview on Sunday night, French Budget Minister F. Barouin acknowledged that maintaining the “AAA” signature for the French public debt was a “goal under pressure”, underlining that a Constitutional rule (currently under study by the government) could help maintain France’s rating. The rule under study could not include specific figures for the debt or the deficit (this cannot be done within the existing Constitution), but would require each new government to commit to an adjustment path over the course of its mandate.
•Der Spiegel reports on “irritations” on the part of the Deutsche Bundesbank in view of ECB bond purchases. So far, the ECB has purchased up to €40bn of euro area government bonds, the magazine writes, with €25bn of Greek government bonds. According to Der Spiegel, representatives of the Bundesbank said the Greek bond purchases were not necessary given that Greece has already got financial support payments. By purchasing Greek government bonds, the ECB would keep their prices artificially high, providing in particular French banks with the opportunity to get rid of their Greek exposure. Don’t know how much weight this story should be given, but it seems like the strong ties between Germany and France has been challenged a bit recently. Think Merkel is very unhappy about France threatening to leave Euro, but I also think Sarkozy wasn’t very happy about the unilateral German naked ban on stocks and bonds that created much more volatility than did anything good to anyone.
•Sterling is likely to remain under pressure on the weekend resignation of the Liberal Democrats’ David Laws on suggestions of abuse of personal expenses. As Chief Secretary to the Treasury he was responsible for identifying the essential spending cuts to be implemented by the new coalition government. Investors are also concerned about the government’s plans for a hike of the Capital Gains Tax, which would sharply diminish the attraction of UK assets.
•This morning saw the release of a series of Eurozone data of interest at the start of a week which should be dominated by the May jobs report in the US on Friday. Overall, those EUR indicators do not suggest that the current ECB’s assessment of macro developments is being challenged, with the recovery remaining bumpy and uneven across countries and price pressures remaining contained despite higher food and energy prices. Against this background, the decline in the EUR is more than welcome as it can potentially offset the impact of fiscal tightening on growth. Eurozone’s Economic Sentiment Indicator (ESI) unexpectedly declined more than 2 points in May as divergence in growth prospects among countries increased. But HICP inflation edged up from 1.5% to 1.6% YoY according to May flash estimate although core price pressures have likely remained subdued.
China Urges Peaceful Resolution

Chinese Premier Wen Jiabao warned against letting the sinking of a South Korean warship lead to conflict in the region, giving no sign of joining other nations in blaming North Korea for the event in which 46 sailors died. “It is the most urgent task to gradually ease tensions following the incident, and especially to avoid conflict,” Wen said today on the South Korean resort island of Jeju after two days of talks with President Lee Myung Bak and Japanese Prime Minister Yukio Hatoyama. China will “help resolve the incident in a way that benefits peace and security.”

Company / Equity News

•American International Group, the bailed-out insurer and Man UTD sponsor , remains in negotiations to salvage the sale of its main Asia unit after Prudential requested a lower price to win shareholders’ approval. Prudential asked that the $35.5 bn price for AIA Group be cut to about $29 bn to $30 bn, and AIG is seeking at least $32 bn, said a person with knowledge of the talks who declined to be identified because they are private according to the newswires
•Australian Finance Minister Lindsay Tanner said the government “won’t back away” from the core elements of its plan for a super profits tax on resource companies. “We’ve certainly indicated that our framework is not going to be altered,” Tanner said today on Channel Ten’s “Meet the Press” program.
•Tom Albanese, chief executive officer of Rio Tinto Group, said Australia’s plan to boost taxes on resources producers would make the government a “silent partner” in businesses such as itself. The proposal for a 40 percent super profits tax on resource companies has also damaged Australia’s reputation overseas and added to sovereign risk, Albanese said in an interview broadcast today on ABC’s “Inside Business.”
•Press reports in the French media that BNP and SocGen are both interested in AIB’s 70% stake in Poland’s Bank Zachodni. Other candidates are believed to be BBVA, Santander, HSBC and Sberbank. Non binding offers are expected by mid June with final binding offers due by the end of August. It has been assumed that AIB will need to show at least one, if not two substantial disposals before moving into position for a rights issue

And finally


By The Mole
PaddyPowerTrader.com

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.© 2010 Copyright PaddyPowerTrader - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in