29 May 2009

Eurozone Economic Confidence Up

Opec decided not to make further output cuts at yesterday's meeting in Vienna. The oil cartel - the world's most important with twelve member countries and 40 per cent of the global oil production - had made three cuts since September 2008.

Back then, oil was at a rock bottom price of $30 a barrel, down from the soaring $147 in July of the same year.

In Europe, there are signs of the worst of the recession being over. At least, the levels of confidence are returning according to figures released this week. According to the index used, executive and consumer confidence is at a six-month high. Those 16 countries that use the Euro are seeing an increase in manufacture and demand.

Overall then, with gloabl stocks, oil and general confidence being back on the cards, it does look like there may be signs of the worst being over.

However, economists are warning against premature excitement. After all, economies are still contracting, just not at the speed they were before.

28 May 2009

Oil Prices Hit Over $60

Exciting news for the commodity futures market - oil prices have reached six-month highs, at over $60 a barrel.

US light crude oil was up to $63.45 a barrel while Brent crude rose to $62.50 by close of business on Wednesday. Both were up by over $1. The news has meant that Saudi Arabia's oil minister has predicted prices will reach close to $80 by the end of the year.

Opec, the main oil cartel made up of 12 member countries, is due to meet in Austria. Since last September, they have cut output levels three times, which reduced the amount of barrels per day in circulation. It had been said that they would call for further cuts in Austria, but this may now not be necessary any longer...

Of course there are those who say things aren't as great as they seem - there are even those who predict a fall in oil prices by the end of the year, sharper than the early 1980s.

Who's right, who's wrong - who knows! But the return to confidence in the oil sector is surely something to think about.

27 May 2009

Inflation Still Falling

It ain't over till....well, we're not sure actually, and outlooks are changing on a daily basis. Today, the USA are increasing confidence (despite rising jobless numbers) on the foreign exchange market by saying they believe their recession will be over by the third quarter. Confident indeed, and the increase in risk appetites on the markets is showing a weakening of some of the 'safer' currencies.

In the UK, deflation still lingers and looms on the horizon. Easy to forget about, this factor could mean some nervous times. The Office for National Statistics showed that both the CPI and the RPI were down in April, meaning annual inflation is also down.

What's to blame for this? Top of the list are lower fuel and food prices. The data released has caused economists to say that deflation is still a higher risk than a "rapid rise in inflation".

26 May 2009

Euro Falls on Bad Debt Warning

The German financial regulator, BaFin, has hit out at German banks - causing a plunge in the euro's recent strength.

BaFin released its annual report and its president added to the doom by saying that unless German banks take advantage of the Government's protection plans, they will be plunged into their worst debts ever.

The currency markets showed the euro's fall - the first in seven days - against the US dollar, to $1.3947, down from $1.4017 on Monday. BaFin president Jochen Sanio said the markets would "kill" those banks that do not accept aid from the state.

The report goes against that which shows business confidence in Germany has risen, something which has given rise to an increase in general market confidence. Many are saying that it is too early to celebrate - and the BaFin report clearly supports this.

20 May 2009

Japan Economy Suffers GDP Shrink

The economy of Japan has shrunk to record levels in the first quarter.

Japan's first quarterly results showed a drop in GDP which was much higher than those of the USA and the Eurozone. While the latter two had drops of around 2 percent each, while Japan's drop was over 15 per cent.

The PM of Japan has called for tough action to be taken in order to recover the suffering economy, and companies have already reacted by announcing more job cuts. Areas that drastically need assistance are exports, household spending and company output.

The Japanese yen will possibly take a blow thanks to lowering confidence of investors in the nation - look at foreign exchange market data to track its progress.

19 May 2009

Derivatives Market in the USA Suffers

According to the BIS, which was formed in 1930 to regulate the US financial market, there has been a shrinkage in the derivatives market.
Since September 2008, when the Lehman Brothers experienced their grand disaster - a catalyst for the rapid world financial downturn Link- investors have been less keen on taking on the high-risk climate of the derivatives market.

It is well known that this market - formed of financial instruments based on loans, commodities, currencies, bonds, stocks, interest rates to name but some areas - carries high risks. Gains can be hugely profitable but it is just as easy to make huge losses.

Since the global financial crisis began to take speed, the derivatives market has been blamed for much of the losses and disasters that occurred in the USA.

18 May 2009

Sir Victor Steps Down as Lloyds Chief

Sir Victor Blank, Lloyds chairman, has announced that he will step down from next year.

The announcement has shown an increase in shares in the bank - a surprise move, one which may have affected CFDs traders - but certainly shows a possible link between the chairman's exit and the bank's future.

The decision has been welcomed by many who feel that his choice to take over HBOS, a merger which caused billions of losses, was a very poor one. But board members have praised Blank, saying that he was - and still is - a "first class chairman" and that he is in no way solely responsible for the losses of the bank.

The Treasury oversees the 43 per cent share in the bank that is now owned by the UK taxpayer - a move which was made in order to try and salvage the ailing "superbank".

14 May 2009

Credit Card Fraud - Customers or Banks to Blame?

Before 2004, every credit or debit card had its data stored on the magnetic strip, and identification was verified using the cardholder's signature. Then, Chip-and-PIN was introduced, changing card safety.

Banks are sure that the system is completely secure, and are unwilling to believe customers who claim they have been the victim of credit card fraud. According to them, if customers have been victims, it is their own fault: by being careless - or acted "without reasonable care". This is being called into question by customers and feel unfairly blamed for the way they have acted - or not as the case may be.

The UK payments association, Apacs, has confirmed that debit and credit card fraud at UK cash machines has risen by 31 per cent this year. So the question remains - is there indeed a slight hitch in the apparently unbeatable chip and PIN system?

13 May 2009

Stress Tests for Europe on the Cards

The IMF's spring forecast for Europe was a bit of a blow to financial sectors - investors, banks and the foreign exchange market....

Overall, it forecast that the stronger economies of Europe will contract by 4% in 2009, and that those of the emerging economies would shrink by 4.9%.

Now, the IMF is calling for Europe to mirror the USA's recent actions and take out stress tests on banks around the region. The IMF believes Europe urgently needs an indicator on the status of the banks and their performances, plus better clarity as to losses.

Doing stress tests in the USA did help to gain confidence for the country as a whole, but would it also provide back up to the IMF's dire forecasts? Or would it show that there may be more to be positive about?

12 May 2009

Euro Continues Strength, Pound in Jeopardy

Watch out for the Euro - it is the new strong currency on the block. It has reached seven week highs against the US dollar at the end of Monday, this fact being put down largely to the ECB's decision to keep interest rates on hold.

Over in Britain, the pound has also been strong in recent times, although don't get too used to it... it might drop again when latest unemployment figures are released. There's nothing like a round of rising jobless rates to cause a currency to receive a hard time.

It's not all bad news though - the sunny Easter weather meant that more people hit the shops, and retail figures for April are up.

08 May 2009

Bank Results Mean Futures Rise

Bernanke seems pretty happy with the outcome, and indeed US Futures stocks rose as a result: the results of the stress test conducted on the main US banks.

Ten of the tested banks will need to boost their cash reserves, but the amount by which they need to do this has been less than expected - the total figure stands at around $75 billion.

The central banks of Europe also had decisions to make - and the outcome was quite different. Many had speculated that the ECB was ready to take on "unconventional" and drastic measures such as the creation of new money, but in fact they seemed to stay on the safe side. Interest rates were cut to an expected 1 per cent. The Bank of England, on the other hand, kept rates at the same level and have plans to introduce yet more money to use in quantitative easing. The news brought a weakening to the Pound against the dollar and the euro, but in fact bank officials are saying that so far, their measures have been going well!

06 May 2009

Traders' Fears Mount Ahead of ECB Meeting

The ECB is set for their latest meeting on Thursday, and tension is mounting. It is known that they will cut interest rates again, to 1 per cent down from 1.25 per cent, but it is the other measures that they will discuss that are causing worries amongst traders on the foreign exchange market.

There are fears that the ECB's tactics may not be enough to boost the Eurozone economy, and that there is too little, too late in the approach of the Bank. The British Pound hit a four-month high against the US dollar yesterday before retreating again. It also gained against the Euro. This kind of trend is being seen as evidence of traders' increased concerns.

Jean-Claude Trichet, the ECB boss, has mentioned "non-conventional" methods and policies to be discussed for adoption. It comes later than UK and US central banks who have already introduced drastic measures to boost economies.

05 May 2009

Euro Weakens as ECB Speculation Mounts

The UK has recently always been predicted to be the country which would suffer the longest through this recession.

This has not improved much in the European Commission's latest report, which has revised the outlook for most of Europe. Most of Europe looks set for decline and in fact Britain is now set to lose around 4 to 4.5 per cent this year - an increase on Alistair Darling's Budget prediction of 3.5 per cent. However, it is Germany who are set to see the biggest decline in 2009 - 5.5 per cent. This decline is the worst in Europe.

The European Central Bank are set to meet later this week to decide on the new interest rate - most are speculating that it will be dropped by 25 base points to 1 per cent. Other measures are set to be introduced in an effort to push the EU economy into more action, and this kind of speculation has had its effect on the foreign exchange market. The euro fell against 13 of the 16 most-traded currencies, including the US dollar and the yen. The outlook for the euro remains weak.

01 May 2009

Metals and Indices Report Strong April

Copper as a commodity to trade has come to the forefront in light of gains in the last month. It rose to $4,459 a ton on the London Metal Exchange –an increase by 0.6 per cent. This data could make or break contract position on the metal. Other metals also saw increases.

The world’s largest importer of copper is China, and demand of the metal has increased there too since their fiscal stimulus programme has been put into place in March. Imports rose by 10 per cent to 296,843 tonnes.

Overall, it seems as though there is an increase in confidence on the markets as newsfeeds keep their hopeful outlook for the world economy, and China's success in light of fiscal boost also has an effect on world performance.

The FTSE 100 had its best monthly performance in six years this April. It closed at 4,243.71, an increase of over 20 per cent. The FTSE 250 also had a strong performance – it gained over 18 per cent, making it the best month on record.