Last Thursday, European markets opened lower following some earlier sell-off across Asia, while the biggest economy of Europe, the German economy has slipped into a recession. Shares in Paris, Frankfurt and London all went slightly down with 0.5 to 1.5 percent in early morning trading. But earlier on the day, Germany’s Federal Statistical Office said that the economic output has lowered with 0.5 percent in the third quarter compared with previous quarter. This was due to a 0.4 percent decline in gross domestic product earlier this year.
The prospects in the UK were also very pessimistic, because telecoms giant BT announced 10,000 layoffs. This news came as the unemployment rate in the UK reached an 11-year record high of 1.82 million.
Also Asian stocks slipped deeper, when investors became more and more convinced that a long recession is on the way. Hugh Johnson, chief strategist at Thomas Lloyd Global Asset Management in New York, says that the main concern of the investors is that the recession will be longer and more severe than expected. Japan’s Nikkei finished the day 5.3 percent lower while the KOSPI index in Seoul has lost 3.2 percent and the Hang Seng index in Hong Kong slipped 6 percent. Australian stocks also went down, as the All Ordinaries finished down 5.4 percent.
Another sign, that shows us the global recession is starting to take hold is that China announced that its powerhouse manufacturing sector has slowed down in October. The industrial output of China grew with only 8.2 percent, when compared with year-ago levels, a decline of 3.2 percent.
Elsewhere, a Kuwaiti Administrative Court ordered a temporary closure of the country’s plummeting stock exchange. This ruling went into effect due to a lawsuit filed by two stock brokers, who were concerned about the steep falls in the Kuwait Stock Exchange.
Before the sell-off across the Asia and Pacific region, Wall Street already knew three straight down days. The Dow Jones lost 7percent and that was the lowest close since October 27. There was also bad news for de Tech stock. NASDAQ fell more than 5 percent, to its lowest level since 2003 and the Standard & Poor’s 500 index fell 5.2 percent. Todd Morgan, senior managing director of Bel Air Investment Advisors, says that this is a culmination of continuing bad economic news and a lack of confidence and fear is disturbing the market. There is also no immediate improvement expected.
It seems to me that it really doesn’t look good for our global economy now the recession has started in Germany. Germany has the biggest economy of Europe, and the fact that a recession has started there shows that it won’t be long before other countries will be suffering from a recession. I think that after all the actions that the different governments have taken, it will be hard to find a solution. All we read in the news today is a string of bad economic news from all over the world.
At first the Asian economy was staying out of the line of fire, but now we see that the problems have started there as well, with a lot of losses on the stock market. I don’t have a good eye in this situation because the economy has always been very protected by the Asian government, and it was a real strong economy. But it seems that it is an inevitable situation.
The question I ask myself is what the governments can do to restore the economy and whether they still have the means to do this. They have taken a lot of actions to help the financial sector, and they have spent a lot of money in these rescue plans, so I hope they are still able to help the real economy now that a recession seems unavoidable.
Source: CNN: World markets down as Germany hits recession
http://edition.cnn.com/2008/BUSINESS/11/12/markets.thurs/index.html
donderdag 13 november 2008
America's not beautiful, but it might look better soon
Barack Obama has won the elections, but just now, when the US is having a terrible economical crisis. Some say it might be the worst since the 1930s. The growth has fallen 25% and specialist don’t expect it to stop soon. The unemployment has taken a leap.
The first thing that Obama will have to do is restore the confidence of the people in the banks. Other plans and policies will be moved at the back. He promised to invest $150 billion in a period of 10 years.
Peter Thomson says that it is possible that the US benefits of the situation. The other countries were having the effects of the crisis much later than the US. So the Us was the first one to get in, it could also be the first one to get out of the crisis and the recession. Besides, the valuations are very low. These 2 circumstances could make sure that the stock market recovers sooner than in Europe.
The dividends that the banks paid out last year, were over 30% of the total dividends. This year, there are only 2 of them that are allowed to pay dividends.
The Royal Bank of Scotland (RBS), HBOS and Lloyds TBS are making a lot of promises to attract people to invest.
For instance, RBS is promising that “their strategy will be much more lower-risk and domestically focused.”
HBOS, on the other hand, will be taken over by Lloyds. They promise savings for a total of £1.5 billion. They will also try to sell some combined businesses, so they would be able to pay off the government, in order to be able to give dividends in 2009.
I also think it is the first activity of Obama to restore the confidence. Without it, the problems will not get solved, on the contrary, they will only become worse. The growth and the unemployment are very bad, those figures really need to get better in order to have a healthy economy.
It is true what the specialists say about the US. They really could benefit of the fact, that will be the first ones to come out of the crisis. While Europe and the rest are still in it, the US can begin to rebuild their economy.
I hope that banks like RBS and Lloyds don’t just make promises, but that they also accomplish them. It is good that Lloyds tries to take measures to pay dividends to their shareholders. After all, that is why people buy the shares, they want an extra above their normal income.
Source: The Guardian – America’s not beautiful, but it might look better soon - http://www.guardian.co.uk/money/2008/nov/09/american-economy-crisis
The first thing that Obama will have to do is restore the confidence of the people in the banks. Other plans and policies will be moved at the back. He promised to invest $150 billion in a period of 10 years.
Peter Thomson says that it is possible that the US benefits of the situation. The other countries were having the effects of the crisis much later than the US. So the Us was the first one to get in, it could also be the first one to get out of the crisis and the recession. Besides, the valuations are very low. These 2 circumstances could make sure that the stock market recovers sooner than in Europe.
The dividends that the banks paid out last year, were over 30% of the total dividends. This year, there are only 2 of them that are allowed to pay dividends.
The Royal Bank of Scotland (RBS), HBOS and Lloyds TBS are making a lot of promises to attract people to invest.
For instance, RBS is promising that “their strategy will be much more lower-risk and domestically focused.”
HBOS, on the other hand, will be taken over by Lloyds. They promise savings for a total of £1.5 billion. They will also try to sell some combined businesses, so they would be able to pay off the government, in order to be able to give dividends in 2009.
I also think it is the first activity of Obama to restore the confidence. Without it, the problems will not get solved, on the contrary, they will only become worse. The growth and the unemployment are very bad, those figures really need to get better in order to have a healthy economy.
It is true what the specialists say about the US. They really could benefit of the fact, that will be the first ones to come out of the crisis. While Europe and the rest are still in it, the US can begin to rebuild their economy.
I hope that banks like RBS and Lloyds don’t just make promises, but that they also accomplish them. It is good that Lloyds tries to take measures to pay dividends to their shareholders. After all, that is why people buy the shares, they want an extra above their normal income.
Source: The Guardian – America’s not beautiful, but it might look better soon - http://www.guardian.co.uk/money/2008/nov/09/american-economy-crisis
zondag 9 november 2008
Sunny times for European stocks.
Many data point to a recession in Europe, but on Monday European stocks were successful.
Investors are willing to take some more risky investments again. This results in a growth for the stock of mining and materials. The more easy credit conditions worldwide helped the raise the equity on long term, but it could not prevent a further slowdown of the economy.
Interbank decreased their three-month lending rate to 2.86%. That’s the lowest rate since mid-September.
On the other hand, the oil and car sector lose some of their gains. Especially the car sector who sold 40% less cars in October than in the same month last year.
On the currency market, the dollar is still becoming stronger. For 1.26 dollar you get 1 euro.
I think people are getting little by little their confidence back in financial products. But still the crises isn’t over yet. For people who are willing to take some risk on the stock market, this could be a great time. Stock are low and they are raising every day. I think the car sector could get problems if the demand for cars stays as low as it is on the moment. The drop of the oil is a good fact.
source: http://www.forbes.com/markets/2008/11/03/briefing-europe-update-markets-equity-cx_ll_je_1103markets25.html
Investors are willing to take some more risky investments again. This results in a growth for the stock of mining and materials. The more easy credit conditions worldwide helped the raise the equity on long term, but it could not prevent a further slowdown of the economy.
Interbank decreased their three-month lending rate to 2.86%. That’s the lowest rate since mid-September.
On the other hand, the oil and car sector lose some of their gains. Especially the car sector who sold 40% less cars in October than in the same month last year.
On the currency market, the dollar is still becoming stronger. For 1.26 dollar you get 1 euro.
I think people are getting little by little their confidence back in financial products. But still the crises isn’t over yet. For people who are willing to take some risk on the stock market, this could be a great time. Stock are low and they are raising every day. I think the car sector could get problems if the demand for cars stays as low as it is on the moment. The drop of the oil is a good fact.
source: http://www.forbes.com/markets/2008/11/03/briefing-europe-update-markets-equity-cx_ll_je_1103markets25.html
World markets down following Obama victory
Because of the election of Barack Obama last Wednesday , the worries over the struggling economy grew. The Asian market did well but the European and American markets couldn’t follow. The markets did well until election day and many investors were hoping that the new president would focus again on taking actions to stop the difficulties on the economic markets.
But there was bad news on the U.S. jobs front. The U.S. employers announced in September 95,094 job cuts, but these job cuts are now estimated to 112,884. This is the highest number of layoffs in almost 4 years. Bad news for the European and American markets, but the Asian and Australian markets rose. The markets of Singapore and India also did well. The cause for these markets to do well was the fact that the investors looked past more signs of a struggling U.S. economy.
The Dow Jones index knew his biggest Election Day rally ever, while in Japan a weaker yen boosted the shares of major exporters, mostly automakers and consumer electronics firms. The dollar was trading at 99.70 yen compared to 98 yen the previous day. Also the oil prices retreated after going over $70 a barrel overnight.
We have seen that the elections have had a very good influence on the stock markets but the closer we came to the Election Day, the uncertainty of the investors grew again because of the bad news on the U.S. job front. The people were already expecting some layoffs but not this much. This is a sign that the economy is not doing very well. It looks like we’re almost stuck in a vicious circle, where the aggravating economy makes the number of layoffs grow, and the high number of layoffs takes away the confidence of the investors. The investors keep their money instead of investing it in the companies, and the story starts all over again.
Source: CNN : World markets down following Obama victory.
http://edition.cnn.com/2008/BUSINESS/11/05/world.markets/index.html
But there was bad news on the U.S. jobs front. The U.S. employers announced in September 95,094 job cuts, but these job cuts are now estimated to 112,884. This is the highest number of layoffs in almost 4 years. Bad news for the European and American markets, but the Asian and Australian markets rose. The markets of Singapore and India also did well. The cause for these markets to do well was the fact that the investors looked past more signs of a struggling U.S. economy.
The Dow Jones index knew his biggest Election Day rally ever, while in Japan a weaker yen boosted the shares of major exporters, mostly automakers and consumer electronics firms. The dollar was trading at 99.70 yen compared to 98 yen the previous day. Also the oil prices retreated after going over $70 a barrel overnight.
We have seen that the elections have had a very good influence on the stock markets but the closer we came to the Election Day, the uncertainty of the investors grew again because of the bad news on the U.S. job front. The people were already expecting some layoffs but not this much. This is a sign that the economy is not doing very well. It looks like we’re almost stuck in a vicious circle, where the aggravating economy makes the number of layoffs grow, and the high number of layoffs takes away the confidence of the investors. The investors keep their money instead of investing it in the companies, and the story starts all over again.
Source: CNN : World markets down following Obama victory.
http://edition.cnn.com/2008/BUSINESS/11/05/world.markets/index.html
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