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Financial Focus

FITCH Ratings cut Greece’s credit rating three levels from B+ to CCC, their lowest grade for any country, as the company followed rivals and said that a default is a “real possibility.”

MOODY’s Investors Service yesterday placed the US credit rating under review for a downgrade for the first time since 1995, on concern the $14.3tn debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. Moody’s took the action despite admitting the risk is low.

FEDERAL Reserve Chairman Ben Bernanke told Congress yesterday that the central bank is prepared to take additional action, including buying more government bonds if the economy appears to be in danger of stalling.

CHINA may maintain growth of about 9% this year, avoiding a “hard landing,” as spending on low-cost homes and developing inland provinces counters the impact of Europe’s debt crisis and monetary tightening.

ITALY’s Treasury will sell as much as 5bnof bonds today, as the Seate votes on budget cuts to reduce its debts, which at 1.8tn, is larger than that of Greece, Ireland, Spain and Portugal combined.

MARKETS:

The Shanghai Composite Index rallied 1.5% yesterday after China’s positive economic data but despite a three-week rally, remains down almost 9% from its peak reached in mid April. Market analysts remain confident of Chinese growth, but point to today’s reported shrinking of Singapore’s economy by an annualized 7.8% in the second quarter, as a sign that Asia’s economic growth might be easing.

EUROPEAN shares are set to open sharply lower on Thursday, as investors avoid risk after Moody’s credit rating warning to the US.

CURRENCIES:

STERLING snapped three days of gains and fell against the euro as the number of Britons filing jobless-benefit claims increased at the fastest pace in more than two years, giving concern that the economic recovery is stalling. It has dropped 6.5% in the past year on Bloomberg’s Currency Index, the second biggest decline after the dollar.

THE DOLLAR Index, a six-currency gauge of the dollar’s value, dropped as much as 0.3% today, after shedding 1.2% yesterday and 0.2% on Tuesday.

ENERGY:

OIL fell in New York, snapping two days of gains, after the US credit rating was put under review for a downgrade, stoking speculation a slowdown in economic growth may temper fuel demand.

COMMODITIES:

GOLD rallied to a record after Moody’s US credit rating warning, US debt-ceiling talks stumbled, and Europe’s sovereign crisis persisted. Platinum climbed as much as 1.2%, and palladium advanced as much as 0.9%.

RICE climbed to the highest since 2008 as Thailand’s government pledged higher guaranteed prices for farmers.

CORN and soybean crops may be hurt by unusually hot, dry weather in the US Midwest over the next 15 days after high winds flattened some fields this week.

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