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Weekly Markets -  19/08/07    Equity markets mixed as the US Fed decreases rates Friday resulting in Wall Street lifting off its lows and also positively affecting other equity markets which were still open at the time of the announcement

 

2006/12/31

 

Index Name

2007/08/12

2007/08/19

Week %  

YTD %

12 Month Rolling %

12343.22

Dow Jones IA

13239.54

13079.08

-1.21

5.96

14.92

2401.18

NASDAQ Comp

2544.89

2505.03

-1.57

4.32

15.76

1410.76

S&P 500

1453.64

1445.94

-0.53

2.49

11.03

817.50

Russell 3000

841.37

835.18

-0.74

2.16

10.91

6503.13

Frankfurt DAX

7343.26

7378.29

0.48

13.46

26.84

6190.00

London FTSE

6038.30

6064.20

0.43

-2.03

2.72

5453.94

Paris CAC 40

5448.63

5363.63

-1.56

-1.66

4.44

17104.96

Tokyo NIK 225

16764.09

15273.68

-8.89

-10.71

-5.17

2343.67

Shanghai Comp

4749.370

4656.570

-1.95

98.69

191.40

24631.00

Jhb ALSI

27076.00

25985.00

-4.03

5.50

22.12

619.20

Gold $/oz

672.83

658.55

-2.12

6.35

8.16

61.84

Oil $/barrel

70.28

69.60

-0.97

12.55

-2.74

7.04

Rand/US$

7.21

7.35

-1.94

-4.40

-4.76

13.79

Rand/Sterling

14.54

14.55

-0.07

-5.51

-9.42

9.25

Rand/Euro

9.84

9.91

-0.71

-7.14

-9.38

1.958

$/Sterling

2.017

1.979

1.88

-1.07

-4.95

1.313

$/Euro

1.365

1.348

1.25

-2.67

-4.90

118.805

Yen/$

117.900

114.383

2.98

3.72

1.20

1.492

Euro/Sterling

1.478

1.468

0.68

1.61

-0.07

 

The week from a global perspective

 

The US Federal Reserve cut its discount rate by 0.5 percentage points on Friday in a surprise move that boosted liquidity in turbulent markets, kicking stock indices higher in Europe and on Wall Street.

But US stocks trimmed gains as concerns about tightening credit markets, which sparked a flight from risky assets last week, lingered. That triggered selling in South Africa.

 

European equity markets rebounded but sentiment remained fragile after a torrid week when the re-pricing of credit risk forced widespread selling by hedge funds and other leveraged investors.

Asian stocks were on track for their biggest rally in more than three years after the U.S. Federal Reserve slashed a key U.S. bank lending rate, helping soothe jitters about a worldwide credit shortage.

 

Crude oil prices rose on worries that hurricane Dean next week might disrupt oil and gas production.

 

The week from a South African perspective

 

Blue chips closed unchanged on Friday after a day of sharp swings when a US discount rate cut fuelled a tentative rebound in global equities, but lingering credit concerns quickly stifled buying.

The Top40 index closed flat at 23 419.07 points, while the all share index dipped 0.03 percent to 25 984.85 points.

It was a volatile session for local stocks, with the Top40 dropping more than 2 percent in the morning, then racing more than 3 percent higher before paring gains in the afternoon.
The rand was firmer to the dollar on Friday, having swung more than 1 percent in both directions during the session in a reflection of the volatility on global financial markets.

 A falling Dollar and rising equities gave gold futures back some of their Thursday losses, with the gain spurred by a surprise Fed discount rate cut.

October platinum rose $1.60 to $1,231.60 an ounce, while September palladium gained $1.90 to $329.75 an ounce.

South African bonds were aided in their recovery after the Federal Reserve intervened in the markets by cutting the discount rate to improve liquidity flows.

The Rand was at R7.40 in Friday afternoon trade, a gain of 0.54 percent from New York's close of R7.44 on Thursday and a lot stronger than it had been during the day on Friday when it reached over R7.50 at one stage.

Some of the Rand's later gains came after the US Federal Reserve cut the discount rate by 50 basis points in an attempt to provide more liquidity to the financial system.

 

The week ahead

 Thursday

-          Tokyo, Bank of Japan makes its monetary policy decision and releases its monthly economic report

-          Johannesburg, SA Grain Information Service monthly bulletin due with the latest grain stocks and exports data

 

Friday

-          Johannesburg, Tito Mboweni speaks at an Association of Black Accountants dinner

 

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