As expected, the FOMC left US interest
rates on hold at 5.25%, citing slowing economic growth whilst watching
inflationary concerns. Other economic releases were a mixed bag, as the
trade deficit for March widened to $63.89BN whilst the countries
Industrial Production declined by 0.2% year on year. US homeowners’
entered the foreclosure process in April at more than double the rate of
a year ago as tightening credit conditions made it more difficult to
refinance and to no surprise US retailers’ are in the main announcing
falling sales. The Dow managed a rise of 0.5%, pushing to yet another
new all time high, whilst the S&P 500 remained level and the Nasdaq was
lower by 0.4%, hurt by Cisco’s forecast of lower revenue growth.
.
The ECB left interest rates on hold at 3.75% with its President,
Jean-Claude Trichet, ratcheting up to “strong vigilance” his concerns
over any inflationary concerns (despite the recent evidence that money
supply was running at 11% year on year in March, the fastest annual pace
in 24 years). Mean while the UK’s Bank of England’s MPC increased its
base rate by 0.25% to 5.5%, a 6 year high as the number of people
entering either bankruptcy or insolvency hit a record quarterly high, at
33075 in Q107, or up by 24% versus a year ago. Staying with the UK, Tony
Blair announced that he is to quit as Prime Minister as of June 27th,
apologising for not always living up to the expectations of the
electorate (to put it mildly!). The FTSE 100 ended the week lower by
0.6%, with the French CAC 40 easing by 0.3%. The German Dax gave up
0.5%.
Out East, last week’s value of shares traded on China’s stock markets
was greater than the rest of Asia combined, including Japan, and even
topped London, the result of revived retail interest in a market that
has trebled in less than two years. Ironically, the Vice Chairman of the
“National People’s Congress” said that only about 30% of the companies
listed on the Shanghai exchange are “good to invest in by Western
standards,” with no comment on the other 70%. Elsewhere Japan’s lending
growth slowed for a third month in April. Over the week the Nikkei
gained 0.9%, whilst the Hang Seng fell 1.8%.
The $US index rallied by 0.5% to 82 as the Euro declined by 0.5%. US
Treasury Bond yields moved higher, as evidenced by the 5 and 10 year
instruments’, ending the week at 4.58% and 4.67% respectively.
Within the commodities complex, the $crude oil price jumped by 3.5% to
$64 a barrel, whilst the $Gold price eased by 2.5%, ending the week at
$672oz..
For next week the latest inflation data is released, with April CPI
numbers announced for the US, the UK and the Euro-Zone.Q107 GDP figures
are also due for Japan and the EU. April retail sales will released for
the UK as will the latest housing data for the US
A recent report, entitled “Infrastructure 2007: A Global Perspective”,
initiated by the Urban Land Institute and Ernst & Young, states that
airports, roads, rail, bridges and other transit infrastructure are
deteriorating across the World due to insufficient investment (despite
record tax inflows) and that the declining ability of Governments’ to
fund infrastructure necessitates an increase for private capital to be
used. Perhaps Government should re-prioritise their current expenditure
between infrastructure and those of Defence and Social Security?
“One
thing is certain, things must change if they are
to get better”
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