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"More Uncertainty on World Markets

Published:

For the past several days it's been speculated that the US was headed toward a massive devaluing of its currency, anywhere from 25% to 40%. 

Soooo isn't it amazing today's article points toward a US$ rebound simultaneously with news of the senate's open borders immigration bill nearing regurgitation ...... I mean completion. 


"More Uncertainty on World Markets

 

 

May 24, 2006
BBC

"The jitters sweeping global markets have reasserted themselves in Europe, as worries about the continent's economies triggered fresh falls.

Photo: Even though it looks worrying, price volatility helps traders make money

Europe's main share indexes all fell sharply, with the FTSE 100, the Cac 40 and the Dax all losing more than 1.7%, despite earlier solid gains in Asia.

Worries about inflation and interest rates overshadowed profits growth.

Analysts expect volatile trading to continue after poor economic figures prompted a global sell-off last week.

Weighing on the markets is the fear that higher interest rates needed to rein in inflation could kill off the global economic recovery in the process.

Higher borrowing costs put a brake on consumer spending and corporate investment, squeezing profits and jeopardising growth.

The cautious mood had persisted in the US overnight, with the Dow Jones index down 0.25% and the Nasdaq down 0.65%

At the same time, metals prices firmed, crude oil prices slid and the US dollar strengthened against the Japanese yen.

'WE ARE SCEPTICAL'

In Europe, the UK's main FTSE 100 share index was down 105.8 points to 5,572.9 at 1157 GMT, with Germany's Dax losing 100.6 points and France's Cac off by 87.22 points.

In India another volatile day of trading saw the BSE Sensex index lose much of the 341 points gain made on Tuesday, closing down 2.3% or 249 at 10,573.

Analysts say that even though there are concerns that price growth may accelerate and push up interest rates, the sell-off means share prices are coming back to levels that could make them attractive to investors.

As a result, they predict that the declines may be short-lived.

A lot will depend on the quality of earnings and economic reports released in coming weeks. Market watchers said they expected a period of consolidation, rather than a rapid recovery.

"We are sceptical if there is anything fundamental about these falls," said Tristan Hanson of Cazenove. "It is more panic."

Electronic price board showing drop in Asian stocks

Photo: The strength and speed of the sell-off caught many people by surprise

Japan's Nikkei 225 index rebounded strongly on Wednesday as a weaker yen lifted optimism that exporters, including camera firm Canon and carmakers Toyota and Honda, would benefit and foreign sales increase.

SOLID METAL

One of the main areas of concern has been the rapid rise of commodity prices, amid fears that a market bubble is about to burst.

On Wednesday, gold prices were little changed, while copper rebounded quickly before levelling off.

Meanwhile, the price of crude oil, one of the main factors behind the inflation fears, dipped as supply concerns eased.

In London, a barrel of Brent crude oil fell back 1.4% to $70, and a barrel of New York light crude slid 1.5% to $70.69.

The US dollar had rebounded against both the yen and euro in Asian trading, but pared gains after a surprisingly strong German report on investor confidence.

In early European trading, euro was up 0.3% at $1.2855, while the US dollar was flat against the Japanese currency at 111.95 yen.

http://news.bbc.co.uk/2/hi/business/5011530.stm

http://www.stevequayle.com/News.alert/06_Money/060524.world.mkts.html

Entry #330

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