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European leaders suspended an overdue tranche of 8bn in international aid to Athens and demanded Greece make a clear decision on whether it wanted to leave the Eurozone at a dramatic meeting on Wednesday night. Under strong pressure from Nicolas Sarkozy and Angela Merkel, George Papandreou agreed to bring forward a planned referendum on the issue to December 4th. He said the referendum would be about Greece’s continued membership of the Eurozone, not just about the 130bn rescue plan agreed late last month. “This is not a question of only a programme,” Papandreou said. “This is a question of whether we want to remain in the Eurozone.”

FEDERAL Reserve officials lowered their outlook for US economic growth in 2012 and forecast that unemployment will average from 8.5% to 8.7% in the final three months of next year. Forecasts for 2012 growth in US gross domestic product from the Fed Board members and reserve bank presidents centred around 2.5% to 2.9%. For this year, the central tendency forecast for US growth was 1.6% to 1.7%.

BEN BERNANKE, the US Fed chairman said unemployment is still “far too high” and the Fed may take further steps to boost growth. Additional stimulus “remains on the table,” Bernanke said today, declining to specify conditions that would prompt a move. “While we still expect that economic activity and labour market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow.”

MARKETS:

HONG KONG shares fell on Thursday, dragged lower by HSBC Holdings Plc and local property names even as mainland markets strengthened in healthy volume as more investors positioned for a fourth-quarter rally in Shanghai. The Shanghai Composite Index rose in healthy volume, extending the gains seen on Wednesday

EUROPEAN share prices are set to fall sharply today on growing concerns that Greek voters might reject in a referendum a new aid package, a move which could lead to a disorderly default by debt-laden Greece and its eventual exit from the euro zone.

CURRENCIES:

THE EURO weakened further against the yen after European leaders said a referendum in five weeks time will determine whether Greece becomes the first to exit the 17-nation currency bloc. THE DOLLAR weakened against most of its counterparts after the US Fed hinted at doing more to prop up the US economy, damping demand.

ENERGY:

OIL fell overnight, paring yesterday’s gains, on speculation that Greece’s referendum on a bailout agreement threatens to intensify the European debt crisis and derail the region’s economy. US crude supplies increased 1.83 million barrels to 339.5 million in the week ended October 28th, the U.S. Energy department said yesterday, which is almost double the amount forecasted.

COMMODITIES:

CORN production in China, the world’s largest grower and consumer after the US, probably rose 6.7% to a record this year as farmers planted more and favourable weather boosted yields, a survey of farmers showed. The increased production still won’t be enough to meet demand, driving a fivefold gain in imports as prices head for the highest-ever annual average.

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