| Weekly Market Overview | ||
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Week ending 18th June 2010 As the head of the IMF joined a chorus of official voices attempting to allay investor concerns over the growing euro zone debt problems, President Obama urged other G20 leaders, ahead of next weeks meeting in Toronto, not to reign in stimulus measures to early, for fear of stalling the economic recovery. Meanwhile, US regulators closed the 83rd American bank this year, bringing failures year to date at about double the pace seen in 2009, due of course by to much stimulus. |
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 Indices - Year to Date (18th June 2010) |
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| US economic data
released this week included disappointing housing starts and building
permits for May, with CPI for the same month as expected at 2% year on
year. The latest consumer confidence data was slightly better than
forecast. The Dow gained 2.3%, as did the S&P 500, whilst the NASDAQ
rose by 2.9%, bring the main indices back into positive territory for
the year. Euro land new car registrations fell by 9.3% in May and the Zew economic sentiment survey for June fell to 18.8 versus the 39 reading expected and the previous 37.6. Meanwhile May CPI for the Euro-Zone fell to 0.1% from April’s 0.5%. UK CPI for May was an as expected 0.2% and at 3.4% annualised against the prior 3.7%, whilst 3 month unemployment to the same month eased slightly to 7.9% from a previous 8%. UK retail sales for May were below estimates, at 3.4% year on year, whilst the latest consumer confidence numbers, were lower than forecast. The FTSE 100 index rose by 1.7%, whilst the French CAC and the German DAX were higher by 3.7% and 2.8%. Out East, the Bank of Japan left interest rates on hold, at 0.1%, whilst in India the May CPI figure jumped to a higher than forecast 10.16%. Elsewhere, the unemployment rate in Hong Kong, for May increased to 4.6% from April’s 4.4%. The Nikkei jumped by 3% whilst the Hang Seng gained 2.1%. The $US index fell by 2.2% this week, to 85.6, with gainers including the Swiss franc, higher by 3.7% and the $OZ, which rose by 2.6%. Most major Sovereign debt yields, with the exception of Japan, rose this week, with German bund yields up by 16bps to 2.73% and the UK 10-year yield higher by 8bps to 3.54%. Japanese JGB yields fell by 3bps, finishing the week at 1.2% whilst US Treasury yields ended slightly higher, with the 5 and 10 year ending the week at 2.02% and 3.22%. Within the commodities complex the $crude oil price gained 4.6% to $77.2 a barrel whilst in the precious metals complex the price of $Gold saw a 2.4% rise to $1257oz, managing a first weekly close over $1250. Next week sees the latest home sales, durable goods orders and consumer confidence numbers for the US plus an FOMC meeting on interest rate policy. The UK has its first budget under the new coalition government, plus the latest minutes from the Bank of England. For the Euro-Zone April industrial new orders will be released, together with consumer confidence data for June, whilst in Japan, June CPI, May department store sales and May condo sales will be announced. John Bogle, who founded the Vanguard index mutual fund group in 1975, gave an interview on Bloomberg this week, where the 81 year old criticised the trading turnover witnessed today within the ETF space. According to Bogle, normal investor turnover is at about 5% pa whereas the SPDR S&P 500 Trust has a turnover of 10,000 percent annually. Whatever happened to long term investing? Due to holiday commitments there will be no week ending next week and will return for the 2nd July 2010.
“Risk varies inversely with knowledge"
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