Posted tagged ‘stocks’

Central US Interest Rate to Stay Low

February 25, 2010

US Federal Reserve chief Ben Bernanke has said that the base interest rate there is to remain low for an extended period. According to the central bank, it is just too early in the recovery process to begin to raise rates.  Not that markets were complaining – US stocks jumped by over 1% following Mr Bernanke’s comment.

Last week, the Fed took everyone by surprise by suddenly raising the discount rate (that is the rate at which banks receive emergency loans) to 0.5% from 0.75%.  It wasn’t the act itself which shocked the market but the timing – it happened much sooner than expected.  Consequently, US stocks had slipped as did the USD.

Meanwhile in the UK, the Bank of England has once again released a wave of uncertainty, by giving an ambiguous stance on asset-buying.  Yes, they decided to finish the 200 billion pound quantitative easing programme at the last policy meeting.

But now it appears as though they are considering re-installing it if inflation doesn’t head nearer to target soon.  The comment echoed a similarly downbeat tone from BoE head Mervyn King earlier in the week, and brought a weakening of the pound by almost a cent to just below $1.54 against the US dollar.

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Emerging Market Stock Funds Healthier than Ever

July 24, 2009

Improving sentiment in the state of the US export market is having a great effect on emerging markets.  Investors are pouring into the emerging market, and last week saw the best figures since mid June.

Nations such as China, Peru and Sri Lanka saw some of the best results in funds while the BRIC nations are showing growing signs of strength thanks to the slow recovery of established economies.

Emerging market equity funds drew around £1.6 billion last week alone and since the start of the year investors have been flowing around £20 billion into emerging market stock funds.

Commodities Under Pressure

July 6, 2009

What’s in your portfolio?

And what are your thoughts on commodities?  According to a new survey there is still relatively low allocation for this form of investment.  This may surprise newcomers given the size and dominance of the oil market,  but indeed as an asset class commodities are low on the scale.

There are differing reasons for this, including the fact that it is relatively new as an investment tool for financial investors.  Up until around a decade ago, commodities were for producers and consumers.  Therefore, their benefits are still being tested and tried for diversification.

Some believe that the risk premium to commdotities is medium and not ideal.  But many institutions (including Deutsche Bank AG) are exploring the possibilities and even plan to launch new indices that can benefit even from anomalies.

Global Stocks Up, Executive Sentiment Up

May 29, 2009

2008 was the year of extremes in the oil market.  In Summer things were soaring, couldn’t stop getting better – the price of a barrel of oil was over $147.

Then September arrived.  The world tumbled down and further down into the downturn, and oil was hit too.  A barrel was worth a mere $30.  OPEC, the main global oil cartel, decided to make production cuts in order to buoy prices.  It worked, and at yesterday’s meeting in Vienna, they decided not to make further cuts – there had been three since September.

Good news then!  If OPEC don’t need to make cuts, and oil is rising steadily then things are beginning to look up aren’t they?

In the Euro‘s 16 nations, things seem to be picking up too.  An index there has shown that executive and consumer confidence is up to a six-month high.  Manufacture is up too and overall global stocks are at a six-month high too.

Calm down though.  We’re still contracting.  Just not quite as much or as fast as before.

Lloyds Chairman to Step Down

May 18, 2009

It does bear slight impressions of a huge car crash where you look in the opposite direction..

Sir Victor Blank has announced he will step down as Lloyds chairman next year.  His decision to take retirement has apparently nothing at all to do with the fact that he chose to take over HBOS, a move which has costs billions in its disaster- levels.  The merger has failed so spectacularly but still could iron out to improve say some.  What really begs questions is the fact that the takeover was made in September 2008 – just after the Lehman Brothers nearly collapsed, an event which would have brought down the global banking sector.

Seems like the perfect time to create a “superbank” backed by Gordon Brown?  Or perhaps a little on the risky side?

Blank has been praised by board members who have called him a “first class chairman”.  So was he just unfortunate for having to preside over such a difficult period in the economy, or is he directly to blame for the vast losses?

His announcement has caused a rise in Lloyds shares on the markets.  CFDs traders might enjoy the return of investors in the UK market – or is it too early to say this?

Invest Now – But what are the Options?

March 26, 2009

So, the tax year is drawing to a close, and many of us might be wondering what to do with the £7,200 ISA allowance.

Now, before we baulk at the idea of entering the market in the current climate, how about going through some of the options…

Ok, so number 1 – invest in the USA, isn’t that the obvious choice?  After all, they are widely predicted to be the first to recover.  But, for UK investors, the dollar to pound exchange rate and vice versa may not bring in the returns, especially if the dollar depreciates against the pound.

Right, so how about sticking with UK equity income funds?  There are some really nice offers available on these, with most around 6 per cent annual income.  Definitely worth a thought.

What about our emerging market cousins?  Russia for example has some quite cheap stocks, and they should see a recovery as soon as the USA begins to pick up again.

There are other more risky options such as Japan, but these are not for the faint-hearted.  One thing is for sure – the time to act is now, as time is running out!!

World Stocks Fall Amid New AIG Misery

February 24, 2009

Asian and World stocks were rattled by the Dow Jones’ 12-year low point as markets in the US closed last night.  The negative cycle seems to be no way near coming to an end, and the market seems to be filled with a growing lack of confidence and unease.  Last night, the Dow closed at 7,114.78 , 251 points.  This depth has not been seen since 1997.

So what made the downward spiral so sharp?  The forthcoming announcement of AIG’s quarterly loss is the major factor.  The loss is expected to be around $60bn – their biggest quarterly loss in corporate history.  AIG has been fraught with issues and they came close to collapse in September 2008.  At the time, the world financial system hung in the balance and faced coming to a standstill if the insurance giants were to crumble.  But the US government stepped in and nationalised the company in the nick of time.  But now, the firm is on the verge of bankruptcy – something which insiders deny will be a certainty (despite calling the lawyers in..).

There are fears for Citigroup and other large banks which are also said to be on the verge of nationalisation.

But what is really spreading negative feeling, rumours and speculation is the fact that there’s a lack of knowledge as to what the Obama administration plans to do in order to save the financial system.  There’s a growing feel amongst investors and the market – currency exchange and stock at the forefront – that while many world leaders are happy to inject more and more funds into the problems, nothing is really giving a positive effect.