A brief look at the markets over the course of the last week, supplied and sponsored by paddypowertrader.
Weekly Market Review: 5 May 08
Equities continued their strong advance, boosted by signs that the US economy was slowing by less than originally feared. The US Federal Reserve cut interest rates by 0.25% to 2%, indicating that rates would now stay on hold for some time. There were concerns over a further fall in house prices in the US and UK, with the latter now showing consistent falls over the past year. But these were outweighed by data showing that jobs and growth in the US were not as dire as predicted. Further central bank injections of liquidity helped sentiment, but a Bank of England report suggesting the worst of the credit crunch was over was treated with scepticism.
The better mood was reflected in equities rising to their highest levels since early January. Indices in the US and Japan rose by around 1%, the FTSE and DAX faired better, ending the week 2% higher. The US Dollar was flavour of the month and consequently oil and gold both fell over the week.
Equities
A string of earnings announcements nudged the market up, despite further poor news from the banking sector. Siemens, SAP, General Motors, Procter & Gamble, BSkyB and Kellogg were just some of the companies that beat analyst expectations. On top of good results, an optimistic outlook allowed Whitbread to raise their dividend by 21%. BP and Royal Dutch Shell benefited from the soaring oil price, but their US counterpart, Exxon Mobil failed to meet expectations. HBOS confirmed its £3 billion rights issue, Countryside Financial results were even worse than expected and Deutsche Bank made its first quarterly loss in 5 years.
On the M&A front the prospect of chocolate chewing-gum improved as Mars made an offer for Wrigleys. Hornby made a model takeover of Corgi and Xstrata hitched up its skirt and said, "Come and get me, if the price is right." Microsoft lost patience and waved goodbye to Yahoo. Smith & Nephew shares tumbled on the discovery that a subsidiary may have lied about its sales figures.
FX
The slide in the Euro gathered momentum, partly due to demand for the Dollar. The Euro ended the week at EUR USD $1.5410 and EUR GBP £0.7800. Sterling weakened marginally against the Dollar to $1.9720.
Commodities - Gold and Crude Oil
Crude Oil touched a new high on Monday as worries over disruption to supplies continued. But the stronger Dollar hit commodity prices, sending Brent Crude Oil a couple of Dollars lower on the week, at $114.56.
Gold fell to a 4-month low and is now struggling to hold support at $850.
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'Online Trading News' by paddypowertrader.com, updated 05-May-08
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Online Trading News, updated 05-May-08
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