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Market Review - 14/11/2008 23:33 GMT
Dollar and yen rise due to the selloff in U.S. stock markets and record drop in U.S. retail sales
The greenback and the Japanese yen rose against major currencies on Friday, underpinned by safe-haven bids as ongoing worries about the global economy and credit markets prompted investors to unwind carry trades. U.S. retail sales fell by 2.8% in October, the biggest drop since records began in 1992 although the University of Michigan preliminary index of consumer sentiment unexpectedly rose to 57.9 this month from 57.6 in October.
Dow Jones industrial average dropped by 337.94 points or 3.82% to end at 8497.31. The Standard & Poor’s 500 index tumbled by 38.00 points or 4.17% to close at 873.29. The Nasdaq Composite index was down 79.85 points or 5.00% to finish at 1516.85. Currency traders have closely followed equity performance for direction in recent weeks. Volatility implied by dollar-yen options expiring in one month rose to 28.55%, the highest in almost two weeks.
The eurozone economy contracted 0.2% for the second time in a row quarter-on-quarter in the July-September period, suggesting Europe's economy fell into its first recession in 15 years in the third quarter, although figures earlier in the day showed France managed to eke out positive growth in the third quarter. The single currency weakened to 1.2574 against the dollar and from 125.72 to 121.35 versus the Japanese yen before closing at 122.24 on Friday.
Federal Reserve Chairman Ben S. Bernanke said the continuing volatility of markets and recent indicators of economic performance confirm that challenges remain. Bernanke said policy makers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant. He indicated central bankers around the world are ready to do more to ease credit strains and support faltering economic growth. Leaders of G-20 countries were gathering in Washington to debate proposals ranging from curbing executive pay and restraining hedge funds to raising capital requirements for banks after financial institutions worldwide lost US $958 billion on securities tied to U.S. mortgages.
Next week will see the release of Japan’s GDP, eurozone trade balance, U.S. Empire state manufacturing and industrial production on Monday; Japan’s leading indicators, U.K. CPI, RPI and PPI, U.S. PPI, foreign treasury buys and net LT TIC flows on Tuesday; Japan’s all industry index, U.S. CPI, building permits, housing starts and real earnings on Wednesday; Japan’s all industry index, U.K. CBI industrial trend, U.S. building permits, housing starts, CPI and real earnings on Thursday; German and eurozone manufacturing and services PMI respectively on Friday.
Dollar and yen rise due to the selloff in U.S. stock markets and record drop in U.S. retail sales
The greenback and the Japanese yen rose against major currencies on Friday, underpinned by safe-haven bids as ongoing worries about the global economy and credit markets prompted investors to unwind carry trades. U.S. retail sales fell by 2.8% in October, the biggest drop since records began in 1992 although the University of Michigan preliminary index of consumer sentiment unexpectedly rose to 57.9 this month from 57.6 in October.
Dow Jones industrial average dropped by 337.94 points or 3.82% to end at 8497.31. The Standard & Poor’s 500 index tumbled by 38.00 points or 4.17% to close at 873.29. The Nasdaq Composite index was down 79.85 points or 5.00% to finish at 1516.85. Currency traders have closely followed equity performance for direction in recent weeks. Volatility implied by dollar-yen options expiring in one month rose to 28.55%, the highest in almost two weeks.
The eurozone economy contracted 0.2% for the second time in a row quarter-on-quarter in the July-September period, suggesting Europe's economy fell into its first recession in 15 years in the third quarter, although figures earlier in the day showed France managed to eke out positive growth in the third quarter. The single currency weakened to 1.2574 against the dollar and from 125.72 to 121.35 versus the Japanese yen before closing at 122.24 on Friday.
Federal Reserve Chairman Ben S. Bernanke said the continuing volatility of markets and recent indicators of economic performance confirm that challenges remain. Bernanke said policy makers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant. He indicated central bankers around the world are ready to do more to ease credit strains and support faltering economic growth. Leaders of G-20 countries were gathering in Washington to debate proposals ranging from curbing executive pay and restraining hedge funds to raising capital requirements for banks after financial institutions worldwide lost US $958 billion on securities tied to U.S. mortgages.
Next week will see the release of Japan’s GDP, eurozone trade balance, U.S. Empire state manufacturing and industrial production on Monday; Japan’s leading indicators, U.K. CPI, RPI and PPI, U.S. PPI, foreign treasury buys and net LT TIC flows on Tuesday; Japan’s all industry index, U.S. CPI, building permits, housing starts and real earnings on Wednesday; Japan’s all industry index, U.K. CBI industrial trend, U.S. building permits, housing starts, CPI and real earnings on Thursday; German and eurozone manufacturing and services PMI respectively on Friday.
