Emerging Markets close to crisis

Currencies Direct October 17th 2008 - 2 minute read

Emerging Markets close to crisis

With increasing fears of a sustained Global recession developing, we saw European indices close sharply lower yesterday, with the FTSE closing down 5.7 percent, German DAX losing 4.9 percent and Frances CAC shedding 5.9 percent.

This was not reflected on Wall street where the Dow Jones Industrial average closed up more than 4 percent on the day. This was underpinned by positive earning signals from companies such as IBM, Google and Advanced Micro Devices.

There was also a feeling from some investors that certain stocks are cheap at these prices.

On the currency front, price movements remained volatile with poor liquidity , making it hard to find any near-term direction.

The US Dollar sagged against the euro but held steady against another perceived safe haven currency the Japanese Yen.

Sterling has climbed slightly against the Euro but has no real impact on the Dollar. At the time of writing Sterling/Euro trades at 1.2895.

Overnight oil rose more than $3, rebounding from a 15-month low below $70 on a late rally on Wall Street and growing expectations of an OPEC production cut.

Economic data is rather thin on the ground today with US Housing stats at 1.:30pm and the University of Michigan confidence report due at 3:00pm. Apart from those to pieces of info, President Bush is due to address the US Camber of Commerce on the ailing US economy.

Looking ahead to next week, on Monday we have Fed chairman Bernanke testifying on the economic stimulus legislation to the house Budget Committee followed on Wednesday by the BofE minutes from their last meeting, even though their scheduled meeting was cancelled after the co-ordinated rate cut.

Also this weekend US and European leaders are expected to meet to prepare for a global summit to discuss the overhaul of the worlds financial system.

On another note. UK press are reporting that UK Banks taking part in the emergency bailout are to be banned from paying dividends for up to five years under European laws.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

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