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STANDARD & Poors say there’s a 50% chance it will cut the US top-grade AAA rating within 90 days on risks a stalemate will endure beyond any near-term deal to raise the US debt limit. The credit-rating agency said it may lower the US long-term rating by one or more notches if it concludes Congress haven’t achieved a credible solution to the rising government debt burden and aren’t likely to achieve one in the near future.

US TREASURY Secretary, Tim Geithner, warned there is no possible time extension to raise the federal debt ceiling. This repeats his repeated message that US borrowing authority will end on August 2nd without congressional action. Fed Chairman, Ben Bernanke, warned lawmakers would cause a “self-inflicted wound” if they prompt a rating downgrade by not raising the debt ceiling.

EUROPEAN regulators’ attempts to bolster confidence in the region’s banking industry are being undermined by Germany’s Landesbank refusing to allow the EBA to publish its results in full. The framework was set up to allow national regulators to keep supervisory powers, and the German regulator will not force Landesbank to reveal its results as planned later today as it claims the London-based EBA lacks legitimacy.

MARKETS:

THE NIKKEI edged higher overnight as bargain hunting offset negative sentiment after Fed Chairman Ben Bernanke backed off hints additional near-term stimulus could be on the way.

EUROPEAN shares are set to dip today, mirroring falls overnight on Wall Street and in Asia, with banking shares set to be in focus ahead of publication of the results stress tests on European lenders.

BANKING shares across Europe could see some volatility ahead of the publication of health checks on lenders by the European Banking Authority, which is expected to show that around ten banks have insufficient capital to withstand a prolonged recession. The results are due at around 5pm UK time.

CURRENCIES:

THE DOLLAR fell against most major currencies after S&P became the second ratings company this week to say it may cut the US credit grade. It also weakened before a US report that economists said will show the cost of living fell in June for the first time in a year, allowing the Fed to maintain record stimulus without worrying about inflation.

ENERGY:

CHINA, the world’s largest energy user, plans to more than double production of its coal-bed methane in five years by 2015 to cut reliance on oil and coal. The fuel, also known as coal-seam gas, is a form of natural gas trapped in coal beds. China wants to triple the use of gas to about 10% of energy consumption by 2020.

OIL companies operating in the North Sea drilled 43% fewer wells in the first half, in part because of a tax increase, a Deloitte review will report today. In addition, results of a survey by the lobby group Oil & Gas UK showed a 20% drop in business confidence across exploration, production and supply chain sectors.

COMMODITIES:

GOLD headed for a second weekly gain after rallying to a record yesterday on concern that the wrangling in the US over raising the Federal debt ceiling and the sovereign-debt crisis in Europe will boost safe-haven demand.

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