Market Uncertainty
Mon, Aug 4 2008, 12:08 GMT
by Andrei Pehar
European session has been fairly choppy and rangy thus far, and I expect more of the same going into the US session as well - there is still lots of uncertainty out there in the markets. HSBC just announced a profit decline of 29% for the first half of 2008, Deutsche Bank had its credit rating lowered after a $3.6 billion write-down, and Fortis saw a drop of nearly 49% for the 2nd quarter.
The United States this weekend saw the closure of the 8th bank since the start of the credit crisis, and the ultimate fate of Freddie Mac and Fannie Mae (at $12 trillion collectively accounting for roughly half of the entire US mortgage market) still remains very much in the air, as the rate of forecloses doubled in the 2nd quarter.
GM again posted record losses, meanwhile Sharper Image, Delphi, NexStore, Sheraton Hotel Miami, and the Carlyle Group's only hedge fund all filed for bankruptcy. The only "positive" news out has been coming from BP, Shell, and ExxonMobil, all of whom have once again posted record profits.
Today is a great day to trade using trendlines and ranges - just make sure the range is wide enough to be worthwhile and note any likely support/resistance in the way before jumping in.
Major players will most likely remain reluctant to takes sides until we get the Federal Reserve's rate announcement on Tuesday, and the Bank of England and the European Central bank announce theirs on Thursday. With so much uncertainty out there, the most likely outcome is that all three will remain unchanged, however the comments accompanying the releases will be watched closely.
