In the Financial World this week, June 6, 2011

In the financial world

·          Most stock markets again finished the week at lower levels on new evidence that the economic recovery is slowing, particularly in the bigger economies
·          The loss of economic momentum reflects the impact of rising commodity costs which have lowered consumer spending power and increased costs for companies
·          Analysts note that the global prices of basic foods will double in 20 years unless there is more investment in climate control and better regulation of food markets. There is a growing shortage of cultivated land, water and energy
·          Greece will receive a second financial support package from the European Union
·          French Finance Minister Christine Lagarde will probably become the next head of the International Monetary Fund with backing of the United States and Japan. Mexican Central Bank governor Agustin Carstens has also been nominated but lacks broad support

In the US
·          There were just 54,000 new jobs created in May, much less than the 220,000 average of the previous three months. The rate of unemployment increased to 9.1 percent
·          Initial jobless claims fell to 422,000 from the previous week’s level of 428,000, a smaller decrease than expected
·          Labour productivity in the first Quarter increased by just 1.8 percent, less than forecast
·          Economists speculate that the Federal Reserve may consider a third round of quantitative easing to support growth
·          The Institute for Supply Management’s index of non manufacturing businesses increased to 54.6 in May while their factory index fell to 57.6 this month, the lowest level since October
·          The Consumer Confidence Index dropped from 66 in April to 60.8 in May, its lowest level in six months over concerns for jobs and the economy
·          The Treasury has confirmed it will sell its remaining 6 percent holding in Chrysler to Fiat for US$ 500 million. The sale will end the government’s connection with the company and give Fiat a 52 percent holding
·         Stock markets fell again for the fifth consecutive week, bringing the Dow Jones Industrial Average to its longest run of weekly losses since 2004. For the year, the Dow is still up 5 percent, with the S&P 500 up 3.4 percent and the NASDAQ up 3 percent. But the indexes were up 10.7 percent, 8.4 percent and 8.3 percent respectively on 29th April.
·         The Dow Jones Industrial Index closed lower by 2.3 percent at 12,151; the Standard & Poor’s 500 Index closed down 2.3 percent at 1,300 and the NASDAQ closed down 2.3 percent at 2,732.

In Europe
·          Inflation in the Euro zone fell to 2.7 percent in May from its 30 month high of 2.8 percent in April
·          The Dow Jones Euro Stoxx 600 Index finished the week down 2.2 percent at 273 and the euro strengthened by 2.2 percent to close at US$ 1.4634 on news of the new rescue package for Greece
·          Germany’s unemployment rate declined from 7.1 percent in April to 7 percent in May, a record low while retail sales in May increased by 0.6 percent over April
·          The DAX closed lower by 0.8 percent at 7,109
·          In France, the CAC closed at 3,890, down 1.5 percent
·          In the UK, inflation is currently at 4.5 percent, more than double the 2 percent target
·          Analysts now expect economic growth of 1.3 percent this year, compared with a previous estimate of 1.4 percent, and 2.2 percent in 2012, down from 2.3 percent previously
·          The FTSE closed 1.4 percent lower at 5,855 and the Sterling pound weakened 0.5 percent to US$ 1.6426
·          Greek stocks and Bonds gained as the European Union, European Central Bank and International Monetary Fund agreed a second financial rescue package. The talks included fiscal plans, state asset sales and structural reforms

In Asia
·          Asian shares fell on Friday following weak US economic data
·          The MSCI Asia Pacific Index again closed unchanged at 134
·          In China, the Purchasing Managers’ Index fell from 52.9 in April to 52 in May, the slowest rate of growth for nine months as the government works to cool inflation and the property market
·          China has been a driving force in the global recovery and it is unclear how this slowdown might affect other national economies
·          The Composite Shanghai Index closed at 2,963, up 0.8 percent while the Hang Seng was down 0.7 percent at 22,949
·          Japanese industrial production recovered in April from a record fall in March but not enough to ease concerns about how the economy will recover from the recent earthquake and tsunami
·          The Nikkei finished the week at 9,492, down 0.3 percent and there are 80.34 yen to the dollar
·          India’s Gross Domestic Product grew by 8.5 percent in the financial year ending in March but by only 7.8 percent in the first Quarter of this year following government moves to control inflation. Food price inflation was still over 8 percent last week
·          The Sensex closed higher by 0.6 percent at 18,376

In Mexico
·          The Central Bank says economic growth slowed sharply in the first three months of the year as factory output fell on weaker exports to the United States and will slow further during the second Quarter
·          It says inflation is now expected to be 3.7 percent in 2011, less than the previous forecast of 3.9 percent giving the Bank more room to help the economy by leaving interest rates low. Interest rates will probably not increase before next year
·          The Consumer Confidence Index rose from 89.2 in April to 89.9 in May; it was over 100 before the 2008 recession
·          Oil production, which funds about one third of government spending, has stabilised after falling by 25 percent between 2004 and 2009. However, the country could become a net importer by 2016 if the current supply and demand trends persist
·          Shares in America Movil fell to their lowest price since March 2010 on Friday following a report that regulators will make the telecommunications company lower prices in Mexico
·         The Bolsa closed 1.9 percent lower in the week at 35,124 and the peso closed at 11.66 to the dollar, having earlier weakened to 11.70 following the unemployment news form the US

In Latin America
·          In Brazil, annual inflation is now 6.5 percent,  much above the target of 4.5 percent and the Central Bank will probably raise its base interest rate again next week
·          The Bovespa closed at 64,340 up 0.1 percent in the week
·          Argentina will introduce a new law banning laundering of one’s own money giving the government new powers to freeze and confiscate property
·          The Merval closed at 3,165 down another 3.1 percent
·          Colombia’s inflation was 3.0 percent in May, up from 2.8 percent in April and above the target 2.0 percent. The Central Bank has  raised its benchmark interest rate by 0.25 percent to 4 percent, the fourth increase this year
·          The BVC stock market closed at 44.30, up another 3.0 percent

In the commodities markets
·          Crude oil closed lower by 0.4 percent at US$ 100.22 per barrel, only slightly affected by the weakened US dollar
·          Gold closed higher in the week by 0.3 percent at US$ 1,542 per ounce having touched US$ 1,546 on Friday on the economic news from the US. It is still below its 2nd May price of US$ 1,576
·          Silver closed at US$ 36.19 per ounce, down 4.4 percent
·          Copper prices fell this week by 1.3 percent to close at US$ 4.13 per pound
·          Corn is down 0.7 percent at US$ 7.54 per bushel. Russia’s return to world grain markets will help offset an anticipated decline in supplies as drought threatens to reduce harvests
·          Coffee futures are up 2.7 percent at US$ 2.71 per pound
·          Sugar prices finished the week at 23.95 cents per pound, up 4.2 percent
·          Cocoa closed at US$ 2,878 per tonne, down 3.1 percent

Join The Discussion