Global Market Analysis (13-08-07 to 17-08-07):
1) US & EU Markets:
· In the world's financial markets, the subprime mortgage collapse may finally be contained. Stocks in the U.S. and Europe rallied after the Federal Reserve unexpectedly cut the discount rate to ease a credit crunch. Crude oil, copper and gold advanced on reduced concern that the U.S. economy, the world's largest, would slow. Three- month U.S. Treasury bill yields leapt as the safe haven of government debt faded and the dollar fell versus the euro for the first time in a week.
· European stocks advanced for the first time in four days after the U.S. Federal Reserve unexpectedly lowered the rate at which it loans money to banks to ease the effects of a rout in global credit markets.
· The biggest rally in four years for the Standard & Poor's 500 Index helped the U.S. stock market wipe out most of the week's losses after the Federal Reserve reduced the discount loan rate.
2) Asian Markets:
* Asian stocks tumbled for the fourth week, posting their biggest drop in 17 years as a deepening U.S. housing slump and spreading credit crunch cooled investor demand for equities.
* Hong Kong & South Korean stocks dropped, completing their worst week since the terrorist attacks of Sept. 11, 2001.
* Asian Stocks tumbled worst in August till day by 11-16 % on US Subprime worries and funds withdrawal by Hedge Funds.
3) Emerging Markets:
· Emerging-market stocks also fell by 6-8% during the week and 7-11 % till day in August on Global Concern.
4) Commodity Markets:
· Crude oil rose 1.4 percent in New York, the biggest gain in almost three weeks, as the U.S. Federal Reserve lowered its discount rate to prevent an economic slowdown and a hurricane bound for the Gulf of Mexico may threaten oil rigs, pipelines and refineries.
· All Non-Ferrous Metals has lost 4-8% during the week on Global Sell Off.
5) Currency Markets:
* The dollar fell versus the euro for the first time this week after the Federal Reserve cut its discount lending rate to prevent credit market losses from slowing the economy.
* Australia's central bank bought the nation's currency for the first time in six years to stem the steepest drop since it was allowed to trade freely in 1983.
* Asian currencies tumbled this week, wiping out this year's gains in the Singapore dollar and South Korean won, as losses linked to the subprime market sparked the worst five-day decline in the region's stocks since 1990.
* Indian INR faced its biggest weekly fall of 1.73 % to Rs.41.33 since May 2004 on continued selling of equities by foreign funds, particularly hedge funds, on the fears the credit squeeze in the US would spread.
6) Bond Markets:
· Two-year Treasury notes gained after the Federal Reserve cut the interest rate it charges to banks, suggesting that central bankers are moving closer to lowering borrowing costs as credit market conditions deteriorate.
· The Federal Reserve reduced the interest rate it charges banks and acknowledged for the first time that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world's financial markets two months ago.
· The Federal Reserve's surprise interest rate reduction failed to revive demand for asset-backed commercial paper and mortgage securities, the very markets the cut was intended to help. The cut "may help add confidence that action will be taken when it's necessary, but further action is needed to actually offset the credit contraction we have had," Ashish Shah, Global Head of Credit Strategy at Lehman Brothers Holdings Inc. said.
* China will probably raise interest rates by the end of September to cool the economy after inflation accelerated to a 10-year high and record trade surpluses pumped cash into the financial system.
1) US & EU Markets:
· In the world's financial markets, the subprime mortgage collapse may finally be contained. Stocks in the U.S. and Europe rallied after the Federal Reserve unexpectedly cut the discount rate to ease a credit crunch. Crude oil, copper and gold advanced on reduced concern that the U.S. economy, the world's largest, would slow. Three- month U.S. Treasury bill yields leapt as the safe haven of government debt faded and the dollar fell versus the euro for the first time in a week.
· European stocks advanced for the first time in four days after the U.S. Federal Reserve unexpectedly lowered the rate at which it loans money to banks to ease the effects of a rout in global credit markets.
· The biggest rally in four years for the Standard & Poor's 500 Index helped the U.S. stock market wipe out most of the week's losses after the Federal Reserve reduced the discount loan rate.
2) Asian Markets:
* Asian stocks tumbled for the fourth week, posting their biggest drop in 17 years as a deepening U.S. housing slump and spreading credit crunch cooled investor demand for equities.
* Hong Kong & South Korean stocks dropped, completing their worst week since the terrorist attacks of Sept. 11, 2001.
* Asian Stocks tumbled worst in August till day by 11-16 % on US Subprime worries and funds withdrawal by Hedge Funds.
3) Emerging Markets:
· Emerging-market stocks also fell by 6-8% during the week and 7-11 % till day in August on Global Concern.
4) Commodity Markets:
· Crude oil rose 1.4 percent in New York, the biggest gain in almost three weeks, as the U.S. Federal Reserve lowered its discount rate to prevent an economic slowdown and a hurricane bound for the Gulf of Mexico may threaten oil rigs, pipelines and refineries.
· All Non-Ferrous Metals has lost 4-8% during the week on Global Sell Off.
5) Currency Markets:
* The dollar fell versus the euro for the first time this week after the Federal Reserve cut its discount lending rate to prevent credit market losses from slowing the economy.
* Australia's central bank bought the nation's currency for the first time in six years to stem the steepest drop since it was allowed to trade freely in 1983.
* Asian currencies tumbled this week, wiping out this year's gains in the Singapore dollar and South Korean won, as losses linked to the subprime market sparked the worst five-day decline in the region's stocks since 1990.
* Indian INR faced its biggest weekly fall of 1.73 % to Rs.41.33 since May 2004 on continued selling of equities by foreign funds, particularly hedge funds, on the fears the credit squeeze in the US would spread.
6) Bond Markets:
· Two-year Treasury notes gained after the Federal Reserve cut the interest rate it charges to banks, suggesting that central bankers are moving closer to lowering borrowing costs as credit market conditions deteriorate.
· The Federal Reserve reduced the interest rate it charges banks and acknowledged for the first time that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world's financial markets two months ago.
· The Federal Reserve's surprise interest rate reduction failed to revive demand for asset-backed commercial paper and mortgage securities, the very markets the cut was intended to help. The cut "may help add confidence that action will be taken when it's necessary, but further action is needed to actually offset the credit contraction we have had," Ashish Shah, Global Head of Credit Strategy at Lehman Brothers Holdings Inc. said.
* China will probably raise interest rates by the end of September to cool the economy after inflation accelerated to a 10-year high and record trade surpluses pumped cash into the financial system.
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