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Financial Focus

America looks set for yet another double-pronged dose of government stimulus, after President Barack Obama launched his “American Jobs Act” late last night, and Fed chief Ben Bernanke hinted at more monetary easing.

CHINA’s annual inflation moderated slightly to 6.2% in August from July’s three-year high, in line with market expectations and raising expectations that Beijing will hold off from further policy tightening which could dampen its demand for commodities and other imported materials.

ECB President Jean-Claude Trichet said yesterday that threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis intensify. The ECB left its benchmark interest rate at 1.5%.

THE UK economy made a poor start to the third quarter in July, with industrial production falling unexpectedly due to a big drop in oil and gas extraction which outweighed a modest rise in manufacturing. The figures cast doubt on whether the economy will find its stride again after nine months of almost zero growth, and may prompt the Bank of England toward further monetary stimulus.

MARKETS:

European benchmark indexes may dip today, halting a two-day tentative recovery and tracking losses on Wall Street. The losses, however, could be limited after data showing China’s annual inflation slightly eased to 6.2% in August from July’s three-year high, raising expectations Beijing will hold off from further policy tightening.

Asian stocks edged up on Friday as Chinese consumer price data soothed fears over inflationary pressures building in the world’s No.2 economy, but the mood was cautious after Western central banks failed to offer any fresh stimulus plans to revive their sputtering economies.

THE S&P 500 retreated yesterday after Bernanke said risks to the economic outlook have increased and policy makers will discuss tools they could use to boost growth at their meeting this month.

CURRENCIES:

The EURO fell broadly after ECB President Jean-Claude Trichet highlighted downside risks to economic growth in the Eurozone after leaving interest rates on hold. THE DOLLAR and yen declined against most major peers after the US President unveiled proposals to create jobs and boost the US economy, damping demand for safer assets.

ENERGY:

OIL headed for a third weekly gain as investors bet Obama’s proposed job-creation plan will support demand for fuel and as producers in the Gulf of Mexico evacuated workers ahead of Tropical Storm Nate. AN 80,000 metric-ton cargo of Libyan crude is being offered for shipment from the western port of Mellitah this month, according to three people with direct knowledge of the transaction.

COMMODITIES:

THE UN Food and Agriculture World Food Price Index has fallen 2.8% from a record in February while remaining 21% above its level from a year ago. Soybeans, the second-largest US crop behind corn, are trading close to the highest since 2008. GOLD eased by more than 0.5% overnight, having risen sharply in the previous session, as investors considered Obama’s plan to boost the US economy.

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