The crude oil fell to a six-week bottom for deepening decline in the euro. Single item lost positions dramatically because the problems of Greece, which reflects favorably on the U.S. dollar. During yesterday’s trading session in New York, oil fell 3.4 percent to 79.97 dollars per barrel, which is the lowest level in six weeks. The single currency did collapse to levels from March 2009, which severely limited interest in investing in commodities. During the night the price of oil has lost more than a percentage to give a level 78.90 dollars a barrel this morning. The euro fell to hand 1,2737 EUR / USD this morning, which had not happened by 10 March 2009 onwards, writes Bloomberg. Thus, within one week, the euro has dropped by over 3,5 per cent, and the retreat of the last half-year exceeds 14%. Exchange in London yesterday by Brent oil fell 3.6 percent to 82.61 dollars a barrel.
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The U.S. index Dow Jones Industrial Average reported 998 points or 9% drop in the beginning of today’s session. Subsequently, the panic was overcome and the decline is limited to 3.2%. Computer error led to a decline in shares of Procter & Gamble with 37% who downloaded DJ decline by about 2% and the remaining decrease was the result of panic is one version of the strong reduction, confirmed by the market operator NYSE Euronext. The Exchange has launched an investigation of the case. News from Greece, expectations for increases in interest rates and overheating in China, other factors are heavy on the market after 18 months achieved Scores of Western indexes. Stock indexes in Europe again loss as sales increase in the late trade. This gave rise to the retreat of shares in the financial sector caused by the passivity of the European Central Bank on increasing liquidity in the euro area. The regional index Dow Jones Stoxx 600 fell 1.5 percent to 247 points today and is already moving at a weekly decline of 4.7 per cent targets. The financial sector was particularly affected by the passivity of today’s ECB decision to keep eurozone interest rate at 1 percent. Shares of Barclays sank by 6.5 per cent and those of Credit Suisse fell by 4.1 per cent. The market capitalization of the Spanish BBVA fell 4.76 per cent.
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The U.S. indexes suffered decline for the second straight day on Wednesday amid growing concerns about the debt crisis in Europe and the strong dollar, which negatively affected the prices of resources, writes MarketWatch. Industrial, energy and mining sector resources were most affected, but financial statements showing the growth in services and data to reduce unemployment have helped mitigate the decline. Dow Jones Industrial Average fell 0.55 percent to 10,867 points, 16 of 30 blue chips closed in the red. “There are problems with the national debt in many countries in Europe, but does this mean that the market is worth 5% less than three days?” Said Art Hogan market strategist at Jefferies & Co. S & P 500 Index fell 0.66 percent to 1166 points, the most poorly known companies in the energy sector. Nasdaq Composite Index fell 0.91 percent to 2402 points. “Overall, the financial statements of companies are good and there are signs that the economy is doing well,” said Kevin Kruzenski, director of the KeyBanc Capital Markets. After the U.S. indexes suffered their worst decline for the past three months on Tuesday, trade began on Wednesday with a new decrease, influenced by growing concerns about the stability of the financial situation in Europe after violence broke out in Athens and is expected to decrease the credit rating of Portugal . “Uncertainty hovers over European markets and of course comes to us’, says Kruzenski.
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The European leaders agreed to create shield fund to halt the spread of Greek financial problems and to avoid undermining confidence in the single European currency. Frightened by the drop-down euro and rising yield on Portuguese and Spanish bonds, the eurozone leaders said details of the preventive mechanism would be made before the opening of financial markets on Monday. “We will defend the euro at any price,” said President of the European Commission (EC) Jose Manuel Barroso during a summit in Brussels. Europe’s inability to rein in the Greek financial crisis led to a 4.3 percent decline of the euro during the week and led the U.S. and Asia to unite in trying to prevent the global debt crisis, to push the world back into recession. It was not disclosed the size of the stabilization fund which will be completed by loans guaranteed by governments of EU member states. Details yet to be specified on the ongoing meeting. “It will be very clear signal to those who want to speculate against the euro,” said Chancellor Angela Merkel. The question of whether anti-speculation market will include restrictions on short sales and agreements for the protection of bankruptcy, Barroso responded that “some of them will be considered. He said he will not exert pressure on the independent European Central Bank (ECB) for the purchase of government bonds.
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Leaders of the U.S. bank Goldman Sachs made an attempt to protect the Tuesday before the committee of the American Congress, who accuse them of having contributed to the formation of a bubble in the real market and generated billions of financial institution gains on the back of her customers. During the hearing, representatives of the bank said it has been practiced classical risk management and is betting that a global decline in the real estate market, Reuters reported. Fabrice Toure, the French officer of Goldman, accused the creation of complex financial products, which focus on investigations initiated the Securities and Exchange Commission, said that there was no hiding important information from their customers. Beam live video of the hearing made investors witnessed the lively discussions and exchanged fierce lines. For example, Senator Carl Levin, chairman of the meeting, asked Dan Sparks, a former director of mortgage lending at Goldman, if he felt a need to inform their customers where Bachelor is betting against their positions. Sparks did not answer directly on this issue and stated that it would use the definition of “shitty deal”, according to which the Committee has used one of his bosses on the part of the activities of the bank.
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For the second day this week, U.S. indexes continued to climb, as higher oil prices helped the good performance of companies in the energy sector. Good financial results of Goldman Sachs, Johnson & Johnson and Coca-Cola have also contributed to the optimism of investors. Dow Jones Industrial Average rose 0.2 percent to 11 117 points, 20 of 30 stocks closed in the composition of the green, led by oil company Exxon Mobil, whose shares rose 1.16 percent. Shares of two other companies in the Dow Jones IA – Coca-Cola and IBM, have lost their positions despite the good financial results for the quarter. Shares of Coca-Cola dropped by 0.1 percent after the largest soft drink producer in the world announced weaker than expected sales growth in the U.S. Higher than forecast profits of IBM, announced before the start of the session, failed to offset disappointing gross profit margin and the company’s shares lost 0.3 percent of the price. S & P 500 added 0.8 percent to 1 207.17 points, as energy companies were among the most profitable, supported by oil, which closed nearly 1 percent growth level of 83.85 dollars a barrel.
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Meetings of the European Central Bank and the Bank of England closed without surprise to the market. Both institutions have left the main interest of exchange systems that control. The level of interest announced ECB remained 1% of the BOE 0.5%. The Bank of England said that at this stage will increase the quantity facilities program, which currently has about 200 billion pounds. Meanwhile, ECB President Jean-Claude Trichet, announced long-awaited extension of the measures taken in connection with the financial crisis. These are the reduction in requirements to guarantee banks’ so-called repurchase agreements, which were adopted in 2008, they will remain in force after 2010 These reports allow eurozone banks to borrow from the ECB in provide replacement of Frankfurt-based institution government securities held by member countries of the eurozone. Depressed criteria allow countries with a credit rating BBB-to participate in such a scheme, as pre-crisis level was A. It is important for European banks that have Greek debt as they can continue to deposit them at the ECB in carrying out of repos.
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Investors should be set to lower than normal returns of both stocks and bonds on over the years, says Bill Gross of Pimco to CNBC. In the context of new definition of his company to “normal” returns in a low growth, he predicted that profitability would be half the usual around 8%, to which investors are accustomed. “We expect lower demand and slower growth in household income compared to previous years,” said one of the leaders of Pimco, the largest fund for investment in bonds in the world. According to the current yield on 10-year U.S. government bonds of around 4% growth shows what we can expect. He warned people who hope to send their children to college or to retire, thanks to investments that will be easy. “Lower your expectations for return on risky assets.” Jack god, founder of Vanguard Funds is less pessimistic about the market return. “The expected return on shares should be around 8% and that of bonds – about 4 percent,” he said.
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The recovery of world economy is still fragile. Therefore, governments of the G 20 should be returned to the already agreed reforms and to implement them, said in a letter circulated to the media leaders of the Coordination Group D 20. The document was signed by U.S. President Barack Obama, Nicolas Sarkozy of France, South Korea’s Lee Myun Bak and Prime Ministers of Canada Stephen Harper and British Garden Brown agency reported Reuters. Our first goal is to return to steady growth and to create conditions for job creation. To achieve this goal, we must create joint strategies and work together to ensure that our budgetary, monetary, credit, foreign exchange, trade and structural measures to keep a strong, sustained and balanced growth, leaders from state government coordination group. Reuters agency notes that this year are scheduled two summit meetings of the G 20. The first is 26 and June 27 in Toronto and the second – in November in Seoul. In his letter, the leaders of the group of most industrialized countries do not talk about policy initiatives that are expected at a meeting in Toronto, but instead invited the governments of the Group to undertake the duties that were agreed at both meetings last year New York and London to introduce stringent regulatory restrictions.
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The decision by a court in Luxembourg, the EU today, is likely to protect from Swiss bank UBS to pay direct compensation to investors who lost money in a fraudulent scheme by Bernard Madoff fund established by the bank, said yesterday. HSBC may also avoid such cases. Court rejected the appeal of a small group of investors who want direct compensation from UBS, and not by the liquidators of the fund Madoff. The decision could affect many are currently facing lawsuits against UBS in its capacity as custodian of funds and LuxAlpha LuxInvest, who have lost a total of about 1,7 billion dollars of investment scheme Madoff. Lawyers have commented that after today’s decision does not expect the courts to allow investors to directly sue for compensation, auditors and trustees of the funds. However, the decision is contrary to EU directives, known as UCITS, which protect small investors by strict rules for investment funds that are open to the public, investors and lawyers intend to appeal the decision.
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