Archive for June 2010

Global Shares Fall

June 29, 2010

Tuesday and shares have fallen around the world on the back of investor nerves.

Heading back to safer assets, investors are nervous on bank repayments to the European Central Bank later this week.  With large repayments due, a healthy portion of financial liquidity will be removed.  The euro fell as many headed back to the US dollar in this morning’s early trade in London.

Meanwhile BP shares have taken a further knock after the company announced its cleanup operation might be affected by tropical storm Alex, which might head for those areas hit by the oil spill.

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Market Moves ahead of Weekend

June 24, 2010

It’s nearly time for another weekend, one which promises to bring fraught nerves and emotion.  Are we talking about a G20 summit or economic data announcement? No…this is far more important to most inhabitants of two European countries:

England VS Germany on Sunday in the World Cup.

But while the weekend, with its peak (or trough) on Sunday, may be around the corner there are still those who are focussing on the job in hand.  Today, Australia announced its first female Prime Minister.  Julia Gillard took over the pole political position after former PM Kevin Rudd chose to throw in the towel ahead of an internal ballot.

The news brought strength to the Australian dollar, which surged against its New Zealand counterpart.  Minining stocks also got a boost, as it seemed likely that the controversial mining tax will receive more attention and review by Ms Gillard.

Markets lost momentum (or interest?) in the topic later on though, with European stock slumps and another weak euro versus the yen and the dollar.  No prizes for guessing why (hint: Greece).

Emergency Budget Announced

June 22, 2010

It’s Budget-time!

Yes, as promised Britain receives its emergency Budget annoucement from Chancellor George Osborne today.  As expected, it is chock-full with cuts and austerity measures which are intended, in Osborne’s own words to prevent “catastrophic collapse” in economic confidence.

Promising to be clear on the plans and not to hide the tough parts from the general public, Osborne launched into his first Budget as Chancellor since the new coalition government was voted in May.

Public sector pensions cuts, tax increases and pay freezes are all set to be part of the short- to medium-term future of Britain.  Backlash is likely especially from trade unions…

Euro Set for Second Week of Gains

June 18, 2010

An interesting week all around as far as the economic world goes.  So far, with half the day gone in London, the euro has namaged to nudge close to a three-week high.  This has been down to investors trimming their sell positions and heading away from the US dollar, as well as renewed calm surrounding the Spanish economy.

After initial fears about Spain’s ability to deal with its large deficit, an auction of government bonds this week saw healthy demand.  This calmed investors, who sensed that the country does show signs of being able to deal with its finances.

Another interesting twist was the US dollar’s lower demand.  This was down to worse-than-expected US economic data which left investors either head back for something a little riskier or going for the favourite ‘safe’ asset – gold.

The precious metal hit new records on Thursday, getting to well over US$1,245 an ounce.  Today, it could hit this record again.

BP Cuts Dividends

June 17, 2010

Investors were surprised to learn of the scale of BP’s cutbacks this week, after the oil company’s meeting with US President Barack Obama.

The company has decided to launch a $20 billion fund which it will add to gradually over time, to pay for its part in the Gulf of Mexico oil spill.  To set up the fund, it has made cutbacks including dividend cuts.  Dividends will not be paid for the next three quarters, a move which has surprised share holders.  In addition, the company will introduce asset sell-ofs and it will scale down its investment programmes.

The news led BP shares to rise in early trade on the London session this morning.  By 8AM they had risen by 7 per cent.

Greece Debt Downgraded to Junk – Take 2

June 15, 2010

Greece’s government bonds have been downgraded by another credit rating agency.  After Standard & Poor’s rated Greece as ‘junk’ in April, now Moody’s has done the same.

Despite the downgrade, Greece seems to be on course with its plans to cut its deficit from 14% of GDP to 3% by 2014.  Moody’s added that it did not see a risk of default for Greece, and that its new status was stable (for now).

Currently, the IMF and EU representatives are carrying out an audit on Greece’s finances, as part of the €110 billion rescue plan they received.

The news caused renewed euro-selling on the currency market, after it had eased off over the past few days.

Euro Gains on Monday Markets

June 14, 2010

The euro started this week making gains, following advances on the equity markets from Friday.  As investors took strength from Friday’s gains on many of the main market indices, safer assets became less attractive, including the yen and the US dollar.

While the European debt crisis is far from over, and the concerns surrounding the region having reached levels where even the Bank of International Settlements (known as the central bank of central banks) has compared the situation with that of the US subprime morgage downturn, investors are clearly looking for any excuse to head back for some risk.

Over the weekend, thousands of protesters took to the streets in cities around Europe, to demonstrate against the austerity measures and cutbacks that they are now facing.  In Berlin, left-wing protesters took the opportunity to detonate a splinter bomb, causing injuries to 15 police officers, two of them seriously.  In other cities demonstrations appeared to run more calmly.

With slogans from political puns to those as basic as “Moneybastards” [sic], people danced to rap music and expressed their anger at governments which in their eyes are to blame for the severe debt problems that the EU is currently facing.