|
|
| • EXCH RATES |
|
Baht/$ 34.57/62 (Bid/Ask)
|
GOLD |
13,100
|
|
NEW YORK _ The bears have been in firm control on Wall Street so far in September, and with anxiety about the health of the US and world economies on the rise, they probably won't choose next week to go into hibernation. Despite news over the weekend that the US Treasury could finalise a plan to backstop the beleaguered mortgage finance companies Fannie Mae and Freddie Mac, the plan, if enacted, was not expected to pull banking stocks out of the doldrums over the long term.
The news sent financial shares higher in after-hours trading on Friday, though shares of Fannie and Freddie fell on concerns that any rescue plan could wipe out shareholder value.
''This will probably be a short-term positive for financials but I don't think this will be an elixir for the entire banking sector,'' said John Schloegel, a vice-president for strategy with Capital Cities Asset Management in Austin, Texas.
For the broader economy, recent data that showed the US economy continuing to shed jobs and warnings from a raft of companies about diminished global demand slammed equity markets last week.
The three main US indices all posted significant declines, with the S&P 500 coming perilously close to a 2008 low set in mid-July. European and Asian markets also fell sharply. In the holiday-shortened week to Friday, the Dow slumped 2.8% to end at 11,220.96. The S&P index lost 3.16% to 1,242.31 and the Nasdaq retreated 4.2% to 2,255.88.
With markets swooning, speculation that troubled hedge funds may be offloading assets has only added to the unease, which analysts say will persist.
''I'm not real optimistic right now,'' said Kurt Brunner, portfolio manager at the Swarthmore Group in Philadelphia. ''Things are shaded more negatively now, and I don't see a whole lot of indicators that suggest positive momentum.''
For one thing, markets have struggled even as the price of oil has continued a steady slide, down about 27% from its July record above $147 a barrel to around $106 last Friday. While a positive for consumers, lower oil prices are also seen as a symptom of slowing global demand.
Companies, too, have forecast tougher times ahead, with Dell Inc predicting slower corporate technology spending and the chip maker Qualcomm saying consumers are not upgrading their mobile phone handsets as frequently.
''There's been a strong contingent of economists who have been feeling that the economy was going to avoid a recession,'' said Sasha Kostadinov of Shaker Investments in Cleveland.
''I think now those people who have been holding out are throwing their beliefs out the window. We've got a soft economy, credit is tight and the consumer is really struggling.''
That leaves economic data front and centre this week, with investors paying particular attention to retail sales, jobless claims and pending home sales.
Analysts said that any signs of further weakness, particularly after last Friday's data showed unemployment hit a five-year high of 6.1% in August while 84,000 jobs were lost, could add to the stock market's woes.
''It will fuel expectations that the economy is in really bad shape and we'll see people talking about it falling into recession,'' said John Praveen, chief investment strategist at Prudential International Investment Advisers in Newark, New Jersey. ''I don't think it will, but the recession talk will resurface, and that will have a negative impact.''
While the US economy is undoubtedly fragile, Mr Praveen said weak data could, along with a stronger dollar and lower oil prices, put to rest one market fear: inflation.
That may set investors thinking that the Federal Reserve has room to cut interest rates again, which could increase consumer and business spending. To that end, he said, producer price data on Friday would be examined for signs of softening price pressures. REUTERS
Prev
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Next
