It was a mixed week for US economic
data, with March pending home sales lower by 4.9% and April unemployment
ticking higher to 4.5% being offset by improved factory orders. Personal
incomes were 0.7% higher in March, whilst spending came in at 0.3%
indicating weaker consumption. There was speculation on Microsoft making
a bid for Yahoo and an unnamed bidder stepping up for Reuters which
added to the positive mood for stocks. The Dow rose by 1.1%, pushing to
yet another new all time high, whilst the S&P 500 gained 0.8% and the
Nasdaq was higher by 0.6%
.
Euro-zone money supply was running at 11% year on year in March, the
fastest annual pace in 24 years whilst in the UK it was at 12.8%.
Euro-Zone CPI was as expected at 1.8% and the region’s unemployment rate
fell slightly in March to 7.2%.. The UK’s FTSE 100 jumped by 2.9%,
buoyed by M&A activity (and rumours of it) whilst the French CAC 40 and
the German Dax rose by 2.3% and 1.9% respectively.
Out East, Japanese vehicle sales fell by 10% in April after falling by
12.6% in March, whilst S.Korea’s exports accelerated in April, rising to
17.8% annualised. China’s Citic Bank Corp, which has held the largest
IPO this year, increased the sale by 15% to $5.95 BN after individual
investors’ in Hong Kong ordered 230 times the number of shares available
to them. Over the week the Nikkei remained level during the Golden week
holidays, whilst the Hang Seng gained 1.5%,
The $US index rallied by 0.3% to 81.8. German 10 year bund yields
declined to 4.19% whilst the Japanese 10 year JGB yield was up slightly
to 1.625%.In the US Treasury market the 5 and 10 year yield fell by 0.9%
and 1.2% respectively, ending the week at 4.55% and 4.64%.
Within the commodities complex, the $crude oil price fell by 6.8% to
$61.9 a barrel, whilst the $Gold price gained 1.2%, ending the week at
$690oz. Copper surged 6% to an 11 month high.
Next week sees the release of the latest trade balance for the US and
the UK, with the former also announcing April PPI and March consumer
credit figures. The main events, however, are the interest rate meetings
due by the FOMC, the ECB and the Bank of England’s MPC.
The crisis in the troubled US sub prime mortgage market has reared its
head again this week as the first-quarter earnings season revealed
mortgage-related losses at UBS, the Swiss bank, totalling
$181m.Elsewhere GMAC, the finance group owned by private equity firms
and General Motors also suffered losses via Residential Capital, once a
star profit generator for GM, which posted a quarterly loss of $910m,
more than offsetting gains from GMAC’s insurance and motor finance arms.
It resulted in a first-quarter net loss for GMAC of $305m, against a
$495m profit on the same period last year.
“Teachers
open the door but you must enter by yourself”
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