Archive for June, 2009

19
Jun

Market Watch

By Shamsh Moosa Closed
Categories: Weekly Market News

The big picture

Global economy stabilizing

 

Finance ministers from the G8 countries agreed over the weekend that the global economy was showing encouraging signs of stabilization. This week, the Bank of Japan held its interest rate at 0.1% and upgraded its economic assessment for the second straight month, on rising exports and output. The Reserve Bank of Australia also refrained from cutting interest rates, given signs of stabilization at home and abroad, noting in particular a strong recovery in Chinese industrial production.

 

In Washington, U.S. President Barack Obama unveiled a proposal for sweeping reforms to bank and market regulation. The plan urges stronger consumer and investor protection, and includes new policing powers for the Federal Reserve and government, and higher capital and liquidity requirements for financial firms. Consumer prices in the U.S. rose just 0.1% in May from April, quelling fears that inflation would threaten economic recovery. Meanwhile, the total number of Americans on the unemployment insurance rolls dropped for the first time since early January. In Canada, the outlook for the economy continued to improve, based on Statistics Canada’s leading indicator index, which slowed sharply in May to just 0.1%, marking the smallest of nine consecutive declines.

 

The markets

TSX gives up some gains as commodities pull back

 

Although the TSX is still up nearly 40% since March 9, falling commodity prices sent the resource-heavy index into a broad-based retreat early this week. Meanwhile, the Canadian dollar fell to a four-week low against the U.S. dollar as the price of oil and metals weakened, and global equities slid on doubts about the strength of an economic recovery. U.S. stocks sagged as some investors unwound trades betting on quick economic recovery.

 

Markets reacted to a disappointing earnings announcement by FedEx, as the company’s business levels are seen as a gauge of the economy’s strength. Research in Motion Ltd. (RIM) announced better-than-expected earnings on Thursday, but offered an outlook that fell short of some expectations, causing its shares to slide 5%. While RIM’s new BlackBerry Tour is slated to launch mid-July, Apple’s new iPhone 3G S launched today – sales could top 500,000 in the first weekend given consumers’ growing appetite for advanced smart phones.

12
Jun

Market Watch

By Shamsh Moosa Closed
Categories: Weekly Market News

The big picture

10 U.S. banks to repay bailout funds

 

In the U.S., 10 of the largest financial institutions are ready to repay $68 billion of government-bailout money. More good news came from a U.S. Federal Reserve survey suggesting the worst of the recession may be over as the “downward trend is showing signs of moderating.” Many analysts predict the U.S. economy to slow by 1–3% this quarter, versus sharp declines of 5.7% and 6.3% in preceding quarters. U.S. retail sales rose in May by 0.5%, the first advance in three months, and job losses slowed, with new applicants for jobless benefits at the lowest level since January.

 

Finance ministers from Group of Eight (G8) countries are expected to offer a brighter assessment of the global economy at a meeting this weekend in Lecce, Italy. Many countries have seen signs of improvement as a result of coordinated policy actions by governments worldwide. In Europe, European Central Bank (ECB) governing council member Christian Noyer expressed cautious optimism that the global economy could turn up in the first half of 2010. The strength of Canada’s banking system has helped it navigate the crisis better than most, according to World Bank President Robert Zoellick. Zoellick offered the praise while speaking to the International Economic Forum of the Americas.

 

The markets

Oil drives TSX higher

 

The S&P/TSX Composite Index has rallied 40% from its March lows, led by the Energy sector. Oil prices extended a three-day rally to hit above US$73 a barrel on Thursday, the highest price since Oct. 21, after the International Energy Agency revised its outlook higher for global oil demand. Oil imports into China rose 5.5% in May compared to the previous year, hitting the second-highest volume on record.

 

Fiat acquired a controlling stake in Chrysler on Wednesday after the U.S. Supreme Court lifted a temporary stay on the sale. Restructuring at General Motors (GM) continues with the Wall Street Journal reporting that GM is “very close” to cutting a preliminary deal to offload Sweden-based Saab. Meanwhile, the US$13.5 billion acquisition of Barclays PLC’s investment unit, BGI, by BlackRock Inc. has created the world’s largest asset management firm with a staggering US$2.7 trillion in assets under management

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