6th October 2008
Week Just Gone
Last Monday evening, US Congress failed to approve the Treasury’s $700bn bailout plan. Indices promptly went into freefall with the Dow Jones finishing the day down 777 points, its largest ever one day fall. Economic releases were largely negative throughout last week, topped off by a 159,000 drop (-105,000 expected) in US non-farm payrolls.
Indices regained some of those early loses. But as the US bailout was eventually passed on Friday evening, the expected equity rally didn’t materialise. The Dow Jones finished down 7.29%, the FTSE 100 fell 6.45% and the German DAX dropped 7.77%. The Irish ISEQ 20 stayed positive last week, gaining 8.27%.
FX
The US Dollar had a big week, rallying after the bailout plan was voted down. GBPUSD shed 3.64% and EURUSD lost 5.53%. The Euro also suffered as it became clear that the ECB will probably start cutting rates sooner than previously expected. EURGBP finished down 1.98%.
Commodities
Commodities prices suffered large falls last week on the back of the strong US Dollar and demand concerns from the world economy. Brent crude oil closed down 13.84% at 89.43 and gold lost 4.76% to finish the week at 836.8.
Corporate
Irish banks fared well last week after the government decided to guarantee all deposits. Anglo Irish Bank benefited the most, rising 17.26%.
Other European banks had a tumultuous week as Hypo Real Estate, Dexia and Glitner all had to be bailed out last Monday. Wells Fargo announced a takeover of Wachovia on Friday, much to the chagrin of Citigroup.
Week To Come
The Bank of England has an interest rate decision on Thursday and the feeling is that they will now cut rates – 25 or 50 points? The Central Banks of Japan and Australia have also to decide on their latest rates on Tuesday. On Wednesday Eurozone GDP is released and the US Trade Balance is out on Friday.
Mining giant Alcoa release their third-quarter results on Tuesday in what is traditionally seen as the start of US earnings season. Oil conglomerate Chevron has their numbers out on Thursday and they could be a good indicator of what to expect from the rest of the industry.
Monday
Economic Indicators
UK: Halifax House Prices
EU: 09.30 Sentix Investor Confidence
US: 17.00 Fed's Evans Speaks, 20.00 Public Debt
Results
There are no company results today.
Tuesday
Economic Indicators
UK: 09:30 Industrial Production
EU: 11.00 German Factory Orders
US: 12.45 ICSC-UBS Retail Chain Store Sales, 13.55 Redbook, 14.00 TIPP Economic Optimism, 16.00 Fed's Stern Speaks, 17:00 Fed’s Bernanke Speaks, 19:00 FOMC Minutes, 20:00 Consumer Credit
Results
US: Alcoa
Wednesday
Economic Indicators
UK: 10.30 BRC Shop Price Index
EU: 07.00 German Industrial Production, 10.00 Eurozone GDP
US: 12.00 MBA Mortgage Applications, 15:00 Pending Home Sales, 15.35 Oil Inventories
Results
There are no company results today.
Thursday
Economic Indicators
UK: 09:30 Trade Balance, 12:00 BoE Interest Rate Decision
IRE: Consumer Price Index, Industrial Production & Turnover
EU: 09:00 ECB Monthly Report
US: 13.30 Jobless Claims, 15.00 Wholesale Inventories, 15.35 Gas Inventories, 21.30 Money Supply
Results
UK: WH Smith
IRE: C&C Group
US: Chevron
Friday
Economic Indicators
IRE: Employment in Construction, Retail Sales Index
EU: 07.00 German Trade Balance, 09.00 Italian Industrial Production
US: 13:30 Trade Balance, 13.30 Import and Export Prices, 19.00 Treasury Budget
Results
US: General Electric
Press Roundup
Germany became the third European country to put unlimited guarantees on domestic savings, after Greece and Ireland, reports the Mail on Sunday. There is mounting pressure on Gordon Brown to follow. Hypo Real Estate Bank were on the brink of failure before the government stepped in, according to the Sunday Times, as its €35 billion private bailout collapsed.
The Sunday Independent leads with the news that the Bank of England Governor Mervyn King is under growing pressure to cut interest rates by a quarter, if not a half point, this week to stave off a full-blown recession.
The Irish Governments decision to issue a €400 billion guarantee to its troubled banks is impacting its credit rating as the Sunday Business Post reveals that German bank Commerzbank is recommending that its clients sell Irish ten-year government bonds.
Wall Street rivals are accusing JP Morgan of dealing the final hammer blow that forced Lehman Brothers into collapse, reports the Sunday Times.
Citigroup is threatening to sue Wells Fargo, according to the Guardian, over the takeover battle for Wachovia.
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