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Brighter note for equities
- Tuesday, May 10 - 2005 at 14:11
Last week equity markets posted nice gains. Reassuring comments from Greenspan and a nice job report damped fears about a strong economic slowdown in the US and allowed markets to take advantage of their trump cards.
Economics
This week we expect the US trade balance to have deteriorated further due to high oil prices, which probably boosted total import value. This could have a negative impact on the dollar.
We expect Eurozone GDP growth to show a rebound in Q1 to around 0.4% (up from 0.2% in Q4), but immediately add that the risks for Q2 remain to the downside.
The BoE will probably postpone its tightening policy until August now consumer spending seems to be weakening.
Foreign exchange
Euro/dollar: The euro fell below its long term support line. That is a bearish sign. For this week, the euro is trapped between support at 1.2780 and resistance at 1.2870.
Dollar/yen: After its April-May decline, the dollar is now making an upward correction.
Fixed Income
Finally some bond bearish news last week: US payrolls better than expected, rising US Unit Labour Cost, re-opening of US 30-yr Treasury bond issuance, and finally a still decent performance of the non-manufacturing sector both in the US and in the Euro-zone.
But the biggest news was in the credit universe: S&P's downgraded GM and Ford to High Yield.
Equities
Last week equity markets posted nice gains. Reassuring comments from Greenspan and a nice job report damped fears about a strong economic slowdown in the US and allowed markets to take advantage of their trump cards.
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Internaxx
Tuesday, May 10 - 2005 at 14:11 UAE local time (GMT+4)
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This article was updated on Sat May 26 2007.
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