Tag Archives: global economy

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Just A Minute!

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Event Of The Day: USD JOLTS Job Openings @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Signs Of A Global Recovery But Economy Going Nowhere Says Top Forecaster

Companies across the globe are increasingly confident about the economic recovery and their own finances for the coming quarter, which shows more countries are planning to increase their staffing in almost six years, according to a survey. The quarterly employment outlook survey by Manpower Group showed that companies in 38 out 42 countries indicated plans to hire more workers in the second quarter, the largest number since the third quarter of 2008. The mildly positive tone of the quarterly survey suggests the global economic recovery will continue with higher rates of employment helping to boost business output and consumer spending. The second-quarter survey results don’t exactly point to a turnaround in Europe, but there are several indications that employer optimism is gradually improving.

While the Federal Reserve, the White House and many private-sector economists support these predictions for stronger growth in 2014, one of the most accurate forecasters in the business, Stephen Stanley, chief economist for Pierpont Securities, disagrees saying that he doesn’t see the impetus for 3% growth. He believes the economy will be satisfactory, with growth in the 2% to 2.5% range, but below the 2.7% to 3.3% expected by the Fed, the White House, the Congressional Budget Office and private forecasters. The recent spate of unseasonably cold and snowy weather has upset the usual tools for forecasting the near-term trajectory of the economy. There’s no doubt that many of the economic indicators of job growth, factory production, retail sales and housing have been massively distorted by the effects of the weather but we are unlikely to really know what the underlying strength of the economy is until the April and May data come in. Stanley is also skeptical that the relaxation in fiscal policy this year will have any meaningful impact on growth or give any support to the economy.

global recovery

Oil Prices Drop After Data From China & Japan Show Weak Trade

The price of oil fell below $102 on Monday after an unexpected drop in China’s exports and weaker economic growth in Japan showed demand for crude could weaken. Benchmark U.S. crude for April delivery was down $1.18 to $101.40 per barrel. On Friday, the contract rose $1.02 to close at $102.58 after strong U.S. employment figures for February. Brent crude was down 90 cents to $108.11. China’s customs data showed over the weekend that exports plunged by an unexpectedly large 18 per cent last month. Robust trade is crucial in helping China achieve its official economic growth target of 7.5 per cent for this year. However, exports in February last year might have been overstated by exporters inflating sales figures as an excuse to evade currency controls and bring extra money into China. Japan revised down its growth estimate for the final three months of last year after announcing a record current account deficit for January. Oil prices surged last week due to severe winter in the U.S. that raised demand for oil and tensions over Russia/Ukraine political situation.

Stocks Update: Facebook, Rio Tinto

Facebook shares have jumped 32 percent so far this year, compared with a 1.6 percent gain for the Standard & Poor’s 500 Index. The surge has left the 49 analysts who cover Facebook divided. 38 of them recommend the company with the equivalent of a buy rating but 21 of the total now have share-price targets below where Facebook is trading. That translates to an average 12-month price target of $72.46 for Facebook, less than 1 percent above the company’s closing price of $72.03 yesterday. With the stock advancing more rapidly than anticipated, the price targets suggest that analysts on average see little upside to the stock which may force some of the bulls to adjust their projections. Facebook’s rally to $72.03 a share has already left it trading at 122 times trailing 12-month earnings, making it more expensive than 98 percent of all companies in the S&P 500.

Meanwhile, Rio Tinto Group, the world’s second-biggest iron ore shipper, said short-term price fluctuations will continue after a credit squeeze in China and high stockpiles plunged the commodity into a bear market. Proof of short-term volatility is being seen this week whilst the market is continuing to see an attractive longer term demand for iron ore, driven particularly by China. Iron ore this week extended its decline, slumping by the most since August 2009, amid concern that demand in China is slowing just as rising output signals a global glut. The Chinese government’s credit squeeze and high stockpiles are driving the rapid change of sentiment.

That sums up today’s highlights! Keep in touch with all the latest market events via our Facebook, Google+, Twitter & LinkedIn pages. We hope you have a profitable day on the markets.

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IPOs Bring Most Money Into Fund Since 1999

Despite the havoc the most recent financial crisis has wrecked upon economies and businesses, many have said that the tough conditions would give rise to further innovations and creativity in the entrepreneurial world,and they may have been right. Initial Public Offerings on U.S. markets recorded the best year since the technology boom of 1999 sending big money into a fun that invests in new companies.

Data compiled by Bloomberg has shown that $165 million has poured into the First Trust U.S. IPO Index Fund during the last quarter of 2013, marking the greatest quarterly earnings since it began in 2006. Total annual inflows for the month totalled at $280 million. The Bloomberg IPO index jumped 64 percent last year, the biggest advance in 14 years, as gains in Twitter and Hilton (HLT) Worldwide Holdings Inc., Facebook Inc. (FB) propelled it through the year.

With investors gaining an appetite for equities, U.S. companies were able to sell $56 billion in new shares in the past year, the most since 2007. Regaining their confidence in IPOs, equity investments were the greatest in nearly a decade. Standard and Poor’s 500 Companies gained over $3.7 trillion in market value. With the global economy in recovery mode, IPO demand is anticipated to remain high.

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U.S. Stocks Fall as Stimulus Cuts Draw Nearer

The next Federal Reserve meeting is taking place next week fuelling speculations that stimulus cut begin as early as next next which caused the second consecutive drop in the Standard & Poor’s 500 Index.

Cisco Systems Inc. dropped 1.6 percent while Laboratory Corp. of America Holdings plummeted 11 percent following a profit forecast that did not match analysts’ expectations. MasterCard Inc. (MA) gained 3.5 percent following the announcement that its board of directors approved to increase dividend by 83 percent and to split stocks by 10 for 1.

Although hitting a record level on 8th December, the S&P 500 lost 1.1 percent yesterday prolonging a two-day slide to 1.5 percent, marking the biggest slide since 7th November. The Dow Jones Industrial Average dropped 129.6 points as the volume of daily exchange of stocks exceeded the three-month average by 6.5 percent.

The Quantitative Easing of the Federal Reserve helped the S&P 500 climb 167 percent higher than its bear-market low in 2009 and the benchmark gauge gained 25 percent this year and is competing with the advance of 2003 as the biggest annual increase since 1998.

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Singapore Affected By Global Volatility

No man is an island…..John Donne’s familiar words ring true in today’s world where a country’s economic strength or weakness is largely determined by its trade and relationships with others. Singapore is a prime example of this. The city-state’s economy shrank 1% in the third quarter, beating expectations of a 3.6% contraction but still marking a deceleration from the 16.9% growth in the second quarter. Economists are blaming this volatility on the economy’s reliance on international trade and financial services, the very same factors which have helped Singapore achieve its relative economic success. This wealthy city-state has so much potential and vulnerability because of its strong relations with foreign markets. Patience is a virtue, indeed, as Singapore now has to patiently wait to see how the U.S. political stand-off pans out, and if the global economy can finally maintain stable growth. Read more…

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Central Bankers Gone Wild?

The ripple effect of the 16-day U.S. government shutdown that made headlines around the world earlier this month has now started to make waves across the planet, showing the real weight of the dollar in the global economic pool.

Earlier this week the Bank of Canada spoke about the need of future interest-rate increase, avoiding the language it used in earlier decision concerning ‘gradual normalisation’, while the central banks of Norway, Sweden, and the Philippines decided yesterday to postpone raising their interest rates further into the future as well. The announcements bolster the Federal Reserves’ plan to delay the withdrawal of its stimulus plan until well into next year. But it is not just the big players who join the movement: from Hungary to Chile, emerging markets around the world have cut interest rates in the past two months.

With inflation and job growth in the industrial world stubbornly refusing to climb to higher levels and a weakening in developing nations, policy makers continue their path of monetary easing in an attempt to jolt global growth from its stagnant position. If recent economic history has taught us anything, however, it is that stimulus creates asset bubbles that play havoc on the markets when they finally burst. And the current bubble has already been inflated by drastic home-price increases across the globe and the MCSI World Index of developed-world stock markets dangerously inching towards its highest level since 2007.

Some economists warn that the current conditions of central bankers pumping liquidity into the markets and promising to keep interest rates down are not normal. Yet, such has been the environment for five years now, as monetary authorities have sought to protect global economy from deflation and have turned to quantitative easing as a means to expedite its recovery. But to what cost?

The financial rewards have so far been limited. The International Monetary Fund this month has clipped its projections for global economic growth from 3.1 to 2.9 percent for 2013, and from 3.8 to 3.6 percent for 2014. It also expects most central banks across wealthy nations to favour lower inflation rates which already fall below the 2 percent average.

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