 |
|
Halfway of correction
|
I believe that the correction will continue this week except Friday.I think US job data will be positive and it will give some leverage to stock market however it is time to adjust world financial system back to the healty train road. We are in the process of it.
I also believe that FED needs to rasie the interest rates because of potential risks in financial system and inflation.It will be a great blunder to ignore further risks ahead. US economic growth is moderate and still can handle another interest rate hike.It is time to take the excess money out of the market which caused the artificial stock price rise in recent years.
I warned my readers several times about this possibility and my prediction was right.
The slide started with a 9-percent fall in Chinese markets on Tuesday on talk that the government would clamp down on speculation, but the focus moved rapidly to global stocks.
The prospect of interest rate increases was an underlying factor for the vulnerability of markets.
The trigger was China; now that the trigger has been pulled, people are reflecting on the strong economy and continued growth in corporate earnings, and that central banks have a tightening bias.
Among conspicuous losers in a weak market were British Airways, slumping more than 6 percent on a newspaper report that of possible strike action.
Europe's biggest bank, HSBC, rose 1 percent, despite profits rising by slightly less than analysts had expected.
CARRIED AWAY
Oil fell by 1.5 percent to below $61, trading at $60.74, copper tumbled nearly 3 percent and zinc, nickel and lead all fell sharply, as commodities added to investors' woes.
Key Tokyo gold futures fell by their daily limit for a second straight session, marking their lowest in early two months.
Investors are concerned about an unwinding in the carry trade, or bets on riskier assets financed by borrowing the Japanese currency.
Currently, momentum has a life of its own. If the yen continues to appreciate, all those in the carry trade will unwind and this could happen fairly quickly.But rate differentials are still wide, especially given that they are expected to rise in Europe.
Goldman Sachs said that it believed markets would recover from last week's significant jitters which I do not agree.
It might take some time, and especially the Fed easing that analysts forecast, before we can look forward to a return to low-volatility upward trending asset markets.
Oil
I see oil downwards this week.However in long run I still think it will be upwards depends on Iran case. Oil prices dropped $1 to below $61 a barrel on Monday as steep falls on Asian and European stock exchanges spilled over into commodities markets.
The trigger for the falls across virtually all markets was a surge in the Japanese yen, in an unravelling of the carry trade that has supported many recent investments.
Ultra-low interest rates in Japan had encouraged many investors to borrow yen and use the money to invest in high-yielding currencies and assets elsewhere.
Oil had been relatively immune to last week's stock market falls. It delivered a seven-session rally, that ended only on Friday, built on falling gasoline stocks in top consumer the United States and OPEC member Iran's standoff with the United Nations Security Council over its nuclear program.
Investors were cautiously hoping for the equities markets to steady this week but the Asian markets have continued to fall, so that's making people nervous.
The FTSEurofirst 300 index of top European shares was down 2.15 percent at 1,431.82 points, hitting its lowest since December 5 and taking losses to over 7 percent over the past week.
Earlier, Tokyo's Nikkei average fell 3.34 percent, marking its biggest one-day tumble in nine months and a new low for 2007, as investors continued to dump shares in exporters following the yen's rise.
Some oil investors are concerned economic growth could stumble and dent demand in the world's top two consumers, the United States and China.
The key factor is the outlook for global demand because some data on U.S. growth has been quite negative therefore investors are pulling out of commodities assets to switch to safer bets such as U.S. Treasuries. |
| Tarih
: 05.03.2007 |
|
|
View
All |
|
|
|
|
 |
|
Untitled Document
| |
 |
| |
 |
Copyright
© 2006 Mert TOKER All Rights Reserved. |
|
|
