17 Apr 2009

The European Central Bank president has said the world economy faces a difficult year but will begin a recovery in 2010. 

‘Confidence today relies equally upon the audacity of our immediate decisions and upon the soundness of our exit strategies,’ Jean-Claude Trichet said in a speech in Tokyo.

He added that the ECB would decide next month on non-conventional ways - other than interest rate cuts - to boost the economy.

In a speech in Washington, International Monetary Fund managing director Dominique Strauss-Kahn also predicted a recovery in 2010 after the global economy moved through ‘deeply negative territory’ this year.

He said governments in advanced economies needed to fix their financial sectors by cleaning banks’ balance sheets of toxic assets, and had to be careful not to withdraw their financial stimulus measures prematurely.

US Federal Reserve officials gave mixed signals yesterday, with the head of the Atlanta Fed forecasting a return to growth later this year, but the head of the San Francisco Fed warning of the potential for an even deeper contraction.

The Atlanta Fed’s Dennis Lockhart told a conference in New York that the US recession would end by mid-year, with growth slowly picking up in the following months. But the San Francisco Fed’s Janet Yellen said signs that some US indicators were stabilising did not mean that the economy was out of the woods.

Sunday, Apr 19, 2009,

Benchmark crude for May delivery added US$0.35 to settle at US$50.33 a barrel on the New York Mercantile Exchange on Friday.

With the May contract ending next week, traders focused on crude stocks with a later delivery under the June contract.

Crude for June delivery increased US$0.31 to settle at US$52.47 a barrel.

In London, Brent prices gained US$0.29 to settle at US$53.35 a barrel on the ICE Futures exchange.

“There’s still a lot of money out there that has to go somewhere,” said Michael Lynch, president of Strategic Energy Economic Research.

“They see it as a good buy long-term,” Lynch said.

Investors see oil stocks as the ultimate safe haven, a commodity that will almost certainly be in greater demand next year. That is what has kept prices aloft this week despite daily reports showing the world economy is running on less oil, not more.

The government said this week that US storage facilities were bloated with the biggest surplus in nearly 19 years.

If that wasn’t enough, the US government, OPEC and the International Energy Agency all revised their demand forecasts, saying the world would consume even less petroleum this year than expected.

A few months ago, such news probably would have pushed crude prices to new lows.

But traders said they have already factored in the tepid global economy and have moved on. They are guided now by rising equities markets and a general hope that better times are ahead.

“Crude’s really moving in sympathy with the stock market right now,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Analyst Phil Flynn also noted reports that China is pumping money into raw materials like oil to shield itself from depending too heavily on the US dollar.

He said in a research note that the move by China has persuaded other investors to snap up oil stocks as well.

“There is growing evidence that China will look to store oil and other commodities as opposed to US treasuries,” Flynn said.
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After cutting interest rates less than expected at the last meeting, the European Central Bank’s leading members appear to be giving a clear signal over what the bank should do next.

In the latest interview, the governor of the Austrian central bank Ewald Nowotny said that the key interest rate should not go below the 1% level. This statement backs what other key ECB members have said over the past few weeks. Among them, the Vice-President of the European Central Bank said that the key interest rate could move somewhat lower, but in a “measured way”. Additionally, Axel Weber, which leads the Bundesbank, said that 1% is his personal bottom line.

Putting the pieces together, it appears that the ECB does not want to cut below 1%, even though the bank adopted a number of quantitative policy measures. “Despite having a much higher interest rate than the Fed, the money market rates in Europe are lower then in the U.S., and this gives the ECB more space to maneuver.” TheLFB-Forex.com Trade Team added.

“If the ECB decides not go any lower than 1% and MR. Trichet or any other of the voting members makes this official, the euro may find very strong support.” TheLFB-Forex.com Trade Team added. “The single currency might strengthen not only against the dollar, but against a whole range of currencies, especially against the pound” they said. “However, this would also have a side-effect, since the euro will gain ground against the Eastern European currencies, which are ready to sink in a pool of foreign denominated debt.”

TheLFB-Forex.com Trade Team notes “Since every other major central bank reached the lower limit of the monetary policy, the ECB policy measures are more important than ever for the euro’s valuation.” Keep an eye on what the ECB members are saying, you never know when the euro might take off”.

08 Apr 2009 

MORTGAGE interest relief may be abolished because of falling house prices and lower interest rates.

08 Apr 2009

DEVELOPERS who accept a property in exchange or as part payment for a new home will not have to pay stamp duty under measures announced yesterday.

1 day ago

NEW YORK (AFP) — Oil prices dropped more than a dollar on Monday as traders tracked fresh falls on global stock markets.

New York’s main contract, light sweet crude for May delivery, tumbled 1.46 dollars from Friday’s closing price to end at 51.05 dollars per barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for delivery in May dived 1.23 dollars to 52.24 dollars a barrel, after earlier shooting as high as 54.31.

“We?re seeing a bit of a correction after the stock market took a hit today,” said Bart Melek of BMO Capital Markets. “We?re falling towards 50 dollars after a pretty considerable rally in the last few weeks and a fairly optimistic equity market.”

Melek said he sensed some profit taking, in reaction to the fall in US and European equity markets.

Shares fell as US investors turned cautious ahead of first-quarter earnings news and European sentiment suffered from disappointing retail sales results.

“Traders are certainly realizing that we are not out of the woods on the demand side, and that perhaps the optimism that was shown over the last few days was a little bit premature,” Melek said.

Global equities had marched higher early Monday as sentiment was boosted by pre-weekend gains on Wall Street and record demand for HSBC bank’s historic rights issue, dealers said.

But European stocks turned south after Wall Street sank on concerns ahead of the US quarterly earnings season starting this week and amid reports that IBM’s takeover deal for Sun Microsystems may be shelved.

London Brent oil had breached 54 dollars in earlier trade on optimism that a global economic recovery could spur energy demand, analysts said.

Crude oil had won support “on speculation that the global economic stimulus efforts and production cuts by OPEC may slow growth in world stockpiles of the fuel,” said BetOnMarkets analyst Dave Evans.

Markets had also shrugged off North Korea’s launch on Sunday of a long-range rocket, which passed over northern Japan without incident, they said.

Oil prices had risen sharply after the Group of 20 London summit Thursday stoked hopes of an economic upturn and rising demand for raw materials.

But markets were overshadowed somewhat on Friday by news that the US unemployment rate jumped to a fresh 25-year high of 8.5 percent in March as recession-battered employers shed another 663,000 jobs.

A spreading worldwide recession has ravaged energy demand and slashed oil prices from their record peaks of above 147 dollars last July.

The Organization of the Petroleum Exporting Countries (OPEC), which pumps 40 percent of world oil, had opted last month to leave production quotas unchanged because of the global economic slowdown.

Late last year, the 12-nation cartel had slashed its output by a total of 4.2 million barrels a day as it sought to halt the slide in oil prices.

Monday, 30 March 2009