US stock prices closed Friday up around 1%, which in the context of recent volatility is not really much to write home about. Recently, US markets have had an average trading range of 2% per day, which is actually down on the recent peak of 4% per day. In volatility terms, things seem to be quietening down, and this is usually a positive for equities which loath the unknown more than bad news. When the economic data becomes more predictable, markets can move to price in bad news, as appears to have happened today. It was a surprise that the markets closed higher, and not what one would have automatically expected from the release of the highest US unemployment numbers for 25 years. Wednesdays ADP job numbers gave traders a reasonable insight to Fridays data, so traders weren’t entirely shocked by the announcement, but the job numbers were very weak. What is most con most shocking aspect of this global recession is how quickly things have developed to the point of near depression levels. In the US 5.1 million jobs have been lost since the recession started, but two thirds of these happened in the last 5 months. It would seem that this has been a similar pattern across the world. With Thursdays agreement from the G20 to inject huge sums of cash into the global economy, world governments are hoping to stem the speed of the collapse at the very least. For the latest stock prices, index charts, stock charts or commodity prices, just follow the appropriate link.
Elsewhere, the long awaited FASB announcement on Mark to market accounting rules were released with positive implications for the banks. Some analysts believe the rules changes could increase banks net income by 20% or more. In addition to this, news that the UK government has agreed to back some of the RBS business loans and the decision by Barclays not to participate in the governments asset protection scheme made it a good week for financial sector overall.
There was mixed news on the UK housing market with the Nationwide saying house prices rose nearly 1% in March, but Halifax saying that prices dropped 1% in March. The differences underline the volatility in month to month housing data.
The ECB ruffled some feathers by cutting rates in the eurozone by just 0.25% to 1.25. Trichet commented that rates could still go lower in coming months, but the ECBs adoption of a ZIRP policy is noticeably slower than the UK and US. Although businesses would have appreciated lower rates, investors seem to have interpreted the ECBs action as meaning that the European economy is in better shape than many thought. The news fueled a rally in the euro against the yen and dollar, but it is the pound that was last weeks strongest performer overall. Sterling rose against all major currencies over last week. This weeks economic highlights include rate decisions from the Bank of Japan and Royal bank of Australia on Tuesday, followed by a rate statement from the MPC on Thursday. Analysts are currently expecting no changed from any of these meetings. In addition the minutes from the last FOMC meeting are released on Wednesday. Thursday also brings UK PPI and US trade balance figures, with Friday being a bank holiday for most countries. You can follow all the latest currency trading news here, along with all the fundamental news on the economic calendar, and if you are looking for a fixed odds broker, please just follow the appropriate link.
