Archive for August, 2008

By and large the Euro is firmer

Friday, August 29th, 2008

On Tuesday the European stock markets closed with Euro by and large firmer. Following heavy losses on Wall Street on Monday the dealers were of the view that the shares had slipped down. According to the data available from America it somehow managed to provide a breather as the economy eventually getting to stabilize and the losses of billions of dollars in the banks due to the subprime crisis of home loan.

It assisted in the offset reviews which projected the confidence shown by the consumers in Germany which is the eurozone largest economy were vanishing very quickly following the output reduced in the second quarter. The FTSE index crashed down 0.62 percent to 5469.70 points. In Paris the Cac 40 increased 0.28 percent to 4367.55 points and in Frankfurt the Dax added 0.68 percent to 6339.52 points.

The top most eurozone company’s Euro Stoxx 50 index gained 0.51 percent. London managed to buck the firmer style where the FTSE 100 index down 0.62 percent to 5469.70.

London buck the firmer trend, with the FTSE 100 index down 0.63 percent to 5470.70 points. In Paris, the Cac 40 rose 0.29 percent to 4368.55 points and in Frankfurt the Dax added 0.69 percent to 6340.52 points. The Euro Stoxx 50 index of leading eurozone companies gained 0.52 percent. London bucked the firmer trend, with the FTSE 100 index down 0.63 percent to 5470.70 points. In Paris, the Cac 40 rose 0.29 percent to 4368.55 points and in Frankfurt the Dax added 0.69 percent to 6340.52 points. The Euro Stoxx 50 index of leading eurozone companies gained 0.52 percent.

Wages of China Airlines hit with the increase in fuel price

Friday, August 29th, 2008

In the first half of the year Chinese airlines reported poor wages due to the rise in the prices of the fuel. On Wednesday Air China gave a statement that their net profits for January-June cut down to 1.24 billion yuan for the first six months when compared with 1.57 billion yuan in the previous year. According to a statement issued on late Tuesday to the Hong Kong Stock Exchange, their competitor China Eastern Airlines those are from Shanghai reported loss of 211.5 in the first half of the year. It compared to the loss of 304.6 million yuan in the month of January-June of 2007.

The growing economy of China and correspondingly impressive expansion in the cargo and passenger demand have helped a lot in dealing the issue of rising fuel prices. But with the disastrous earthquake that came on May 12 in Central China and due to the Beijing Olympics the passenger traffic considerably slowed down.

According to a statement by Air China, due to the slump in the international economy, increased price rise, natural calamities like earthquake, rising prices of the fuel in the first half of the current year, the aviation industry especially aviation industry of China had to face a lot of difficulties. On the other hand China Eastern despite of the fact that there is a 1.9 percent profit noticed in the traffic on domestic routes they also witnessed a downfall for its international and Hong Kong routes. It was estimated the further weakening in the international and Chinese economies.

It was said that in the remaining year the demand for the air transport will witness a downfall as the increasing cost will emerge as a main issue. Both the airlines anticipated that with the easing of the transport limitations there will be development in the field of travel to the island of Taiwan.

With the rise of Chinese currency as compared to the American Dollar the Foreign exchange gains of around 1.8 billion yuan was projected by both the airlines. But unfortunately for the past few months the gains for yuan came down with the dollar bouncing back in the global markets.

Australian Dollar drops a two day low as compared to New Zealand counterpart

Friday, August 29th, 2008

In Asia Australian Dollar witnessed a drop of a two day low against the Dollar of New Zealand. In the meantime the Australian Dollar was stronger as compared to American Dollar and Canadian currency. On Wednesday Australian Dollar moved ahead against the American Dollar in the Asian deals. The Australian Dollar arrived at 0.8604 which was up from a low of 0.8496 hit yesterday.

The Australian Dollar pair closed the North American session at 0.8560 on Tuesday. The meeting where the members of FOMC took part and in the meeting there were some members who were of the view that the rates should be increased earlier as it was expected by the financial markets.

Following the meeting of September 16th, the Federal Reserve is planned to finalize their next verdict on the rates of interest. Analysts will be having a close watch on the released data in the weeks that will be leading to the meeting to decide the probable decision of Fed’s. The Australian Dollar reached at 1.7165 as compared to the European single currency on Tuesday and became stronger afterwards.

The euro-Aussie Dollar pairing currently quoted at 1.7140 as compared to 1.7118 hit on Tuesday. The Australian Dollar against its New Zealand counterpart witnessed a decrease on Tuesday. At the moment the Aussie and New Zealand counterpart paring is trading at 1.2224 as compared to the yesterday’s closing value of 1.2275. The Australian Dollar was between 93.89 and 93.61 as compared to the Japanese Yen. For the moment the pairing of Australian Dollar and yen is trading at 93.82 as compared to the closing value of 93.82 on Tuesday.

The Australian Dollar against the Canadian currency gained in the evening on Tuesday. The Australian Dollar and Canadian counterpart moved to 0.8996 from 08984. The pairing that ended New York deals at 0.8976 is trading at the moment at 0.8984. As in the European session there are no economic releases listed, the traders are awaiting of the American July durable goods orders report which was scheduled to get released in the New York’s session.

Pound and Euro get busy to settle previous losses

Friday, August 29th, 2008

It was noticed that during the Asian trading, the Euro after witnessing a fall under 1.4699 went up to over 1.4743. Due to the depression and falling prices of the oil EURUSD crashed down at approximately 100bps. Overturning of the crude prices would easily bring about a scenario where the Euro will be looking for wiping out its previous losses.

With the economic recession continues to take place there are chances that Euro might be trading heavy all through the week. The final reading of Germany’s GDP 2Q will probably get modified lesser which will show growth contracted in the biggest economy in Europe. If the situation still persisted where Germany’s IFO continuously slide downwards then there are probabilities that we could witness the pair facing the lows of the year.

Before the prices of the oil pushes the GBPUSD back to over 1.8488 in the previous trading just breaking under 1.8398 price level, the Pound witnessed same price war where the Euro dropping over 100bps. In the second quarter with the growth has risen considerably and it has also raised the anticipation that at the end of the year the BoE will be decreasing the rates. The Sterling has gone down through majority of the support levels.

Expressing his views in a speech in Osaka, Masaaki Shirakawa Governor of BoJ said, the present rates of interests are accommodative and the economy of Japan is not likely had to go through an adjustment stage. Subsequently when the trend line support will be found then all through the week we can witness the high pair trading particularly if finally there is a decision taken to the GSE issues.

Believing in the headlines of Freddie Mac and Fannie Mae’s issues, the dealers will be diverting their attention towards the housing data. Bouncing back to in home sales, it could endow the investors with a hope the market of the housing is turning.

UK mortgage delinquencies on the rise

Friday, August 29th, 2008

In the second quarter, the people of Britain are not able to meet the mortgage repayments as it increased considerably. According to a report by Standard & Poor it is proposed that the situation might get worse in the future as the main reason of the failure is in subprime area. With the heavy reduction in the accessibility of credit it has even started to create problems for the major borrowers.

Standard & Poor’s delinquency index for Britain’s nonconforming suburban securities those are mortgage-backed increased to 23.30 percent in the second quarter. In the first quarter it increased from 22.16 percent which was the highest since the start of the index in the year 2004. Delinquencies for the major suburban mortgage-based securities in the earlier quarter increased from 2.32 percent to 2.93 percent

According to Kate Livesey who is a credit analyst at Standard & Poor, she was of the view that it is the affordability pressure that has led to the increase in the delinquencies and particularly for those borrowers whose loans are rearranged to the high floating rate of interest. As there is no hope of respite in the credit situation and the prices of the housing keep on falling, in the coming quarters we can imagine the delinquencies to increase along with the losses.

In the second quarter the ratings on tranches of ten nonconforming British suburban mortgage-backed securities were decreased by Standard & Poor. The ratings of eight transactions were placed on CreditWatch negative which showed the worsening performance. It was noted that the losses were coming out more quickly which signifies tougher times to come.

Approximately, since the month of last August Britain witnessed a downfall of ten percent of the house prices. With the depression and the unemployment on the rise the banks have also stiffened their lending rules and most of them decline to provide with the mortgages to the home buyers with a deposit of less than 25 percent. According to the figures released by Council of Mortgage Lenders in the first half of this year Britain witnessed the repossession of more than 1800 homes.