Week ending 15th December 2006      

Two pieces of economic data set the tone for US equities this week. First up was the better than expected retail sales for November, which rose by 1%, followed by the release of core inflation data, which was flat for November. The countries October trade deficit fell by 8.5%, the largest decline in 5 years and Q406 record earnings by Wall St brokerages added to the joy. Finally the FOMC left interest rates on hold at their final scheduled meeting of 2006. The Dow gained 1.1% just shy of the S&P 500’s 1.2%.The Nasdaq Composite, rose by 0.8%.

Euro – Zone inflation rose to 1.9% year on year in November, whilst the UK CPI jumped by 2.7%, the highest rate in 9 years. UK average earnings are running at 4.3%, whilst wage growth in the Euro zone was at 2% annualised during Q306, the slowest pace in 8 years. Bid speculation within the banking and retail sectors ensured support for the regions main bourses. The FTSE 100 index gained 1.8%, whilst the French CAC 40 and the German Dax were higher by 2.9% and 2.5% respectively.

Out East, Japan’s Q406 Tankan survey showed a 2 year high in confidence for large manufacturers’., whilst China had its 2nd largest trade surplus in November at $22.9bn, as exports surged by 33% year on year. Hong Kong prime office rents surged by 21.6% over the first 11 months of this year, according to Jones Lang LaSalle Inc. Over the week Japan’s Nikkei rose by 3% whilst the Hang Seng gained 2%.

Within the currency markets, the $US index rallied by 0.9% to 84, building on last weeks reversal of trend and despite adverse comment on the Greenback from former Fed chief Greenspan.. Treasury bonds ignored the better inflation data, with the 5 and 10 year yield moving higher by 1% to end the week at 4.6% each. The UK 10 year yield finished higher at 4.68%, whilst the European equivalent eased to 3.8%.

The commodities complex saw the $Oil price rise by 3.3% to $64 a barrel, as OPEC announced a 1/2m barrels a day production cut at its meeting in Nigeria. The precious metals complex had another volatile week, with the $Gold price falling by $18 or 1.9%, to end the week at $615oz, $Silver fell by 7% on Friday afternoon

Next week sees Q306 GDP data for the US and the UK , whilst the latest trade balance is released for both Japan and the Euro-Zone. Eyes will also be focussed on the latest housing starts information for the US, together with the UK PSBR and Bank of England minutes.

This is our final “week ending” for 2006, but we will return in early 2007. May we take this opportunity of wishing all readers a very Happy Christmas and for a happy, healthy and prosperous New Year.

“A friend is someone with whom you dare to be yourself”

[ Back ] [ Up ]