Today’s session brought indexes in Asia and the Pacific region, the strongest decrease their day for the past eight months, but ended the week with a painful decline in most markets in the region. Stood at the head Japanese, Chinese and South Korean securities market, which lost between 4% and 6% of its market capitalization over the past five trading sessions. Reason for mass sales became the news of the failure of the Dubai government investment holding company Dubai World to meet its obligations to creditors. The Fund has a debt for 59 billion dollars, equivalent to most of Dubai’s foreign debt to 80 billion dollars. Meanwhile, the Japanese yen rose to its highest rate against the dollar since 1995. Financial difficulties of the Dubai World stocks fell on banks and insurers in the region, led by HSBC Holdings, whose shares fell nearly 8 percent. This is due to investor concerns about exposure of large international banks to fund Dubai. Construction companies also suffered because of the activity of the Dubai World in the construction sector. The regional index MSCI Asia Pacific, which brings together companies from stock markets in ten Asian countries plus Australia and New Zealand, slid 3.2 percent to 113.78 points. This is the strongest decrease in the stock measure within one day of 30 March so far. Financial companies in its composition have contributed most to the sharp drop in MSCI Asia Pacific. The good news that unemployment in Japan fell for the third consecutive month in October, while consumer spending increased household failed to stop reductions in the indexes. Thus MSCI Asia Pacific to cut their lead to five-year bottom of 9 March to 61 percent. For the past five trading sessions the index fell by 2,7 percent.
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Lithuania will not adhere to the “painful” scheme for adopting the euro, which will shrink consumption and greatly harm the economy, said Prime Minister of the country Cubilus Andrews. The country probably will fail to meet EU requirements for the deficit within 3 percent of GDP by 2011, so the adoption of the euro can not happen before 2013, said in an interview yesterday, Finance Minister of Lithuania Ingrid Simon. “These are very ambitious and very painful measures, and, of course, there are any limits on what measures can enter,” said Cubilus. The aim is not to kill the entire economy and stability in society by reducing costs, salaries and pensions. Lithuania’s economy contracted by 14,3 per cent in the third quarter after the government took budget cuts, equivalent to 8 percent of GDP this year. Even after these stringent measures, the evaluation of the European Commission Lithuania will have a deficit of 9,7 per cent in 2011 to 9.8 per cent for this. Lithuania, whose currency – liras is tied to the euro should be introduced European single currency “as soon as possible, but the opportunities in turn have practical limits and practical measures should be introduced,” said Cubilus. The government has proposed the 2010 budget cuts of 5 percent of GDP, aimed at social welfare. Lithuania lags behind neighboring Estonia, which plans to join the eurozone from January 1, 2011, after years of using the government budget surplus for the establishment of reserves. This allowed the public finances remain intact even after the crisis hit the country.
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The main stock indexes in the United States did not make an exception and also went to negative territory in early session today after holiday similar to those in Asia and Europe. Among losers ran those companies from the financial, energy and extractive industries. Reason for this were concerns about the inability of the state’s largest investment holding company of Dubai to pay its obligations. The way in which world financial markets reacted to news about the financial difficulties of the emirate of Dubai, showed how market participants remain sensitive to any bad news from the financial sector. Today’s trading will be shortened by half and therefore the liquidity is expected to remain low until the end of the trading session, which will end at 20:00 pm local time. The index of the 30 most liquid companies large and Dow Jones IA decreases by 1.2% to 10 341.6 points an hour and a half after the beginning of the session. On Wednesday, the stock measure reached its highest peak in the last 13 months of good data on the housing market and the labor market. A broader index S & P 500 also lost 1.2 percent to 1 097.3 points, after the very beginning of the session are reduced by 2.5%. The index, which combines all companies in exchange Nasdaq – Nasdaq Composite, retreated 1% to 2 153.5 points.
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The price of oil dropped to its lowest level in over six weeks since the news that the government investment fund Dubai World in Dubai has requested postponement of payments on obligations, which exceed $ 59 billion. The decline in the value of the raw material was also supported by increased oil stocks in the U.S., indicating weak demand from consumers and industry. U.S. light crude for January delivery fell by $ 3.44, or 4.4 percent to 74.52 dollars per barrel in late Asian trade. For the last oil is sad at this level on October 14. Since the beginning of the week the raw material decreased from 2.8%. The dollar, which was one of the few winners from stall stock prices of raw materials and upload their values to levels of 1.4920 EUR / USD against 1.5019 EUR / USD yesterday. Rally index MSCI Asia Pacific, which monitors presentation of shares in the Asia-Pacific region fell by 3% to 114.08 points in Tokyo. This was his most potent decrease from August. Quotes of the indexes S & P and Dow Jones Euro STOXX 50 is accordingly decreased by 3.2% and 1.7%. Main DAX index of the Frankfurt Stock Exchange fell by 0.60 percent this morning after yesterday sank more than 3% Index CAC 40 of the Paris Stock Exchange lost 1.79 percent targets yesterday after a decline of 3.41% London FTSE-100 fell by 0.80%
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The price of gold fell by more than 4 percent on the London Metal Exchange today after the appreciation of the dollar reduced the attractiveness of the precious metal as an alternative investment. Dollar increase after the news about the financial difficulties of the Dubai government investment fund Dubai World, which reinforced fears in financial markets. Dollar Index, which monitors the rate of the dollar against a basket of six major currencies, rose by 1 percent today, after earlier this week dropped to their lowest level in 15 months. As a result, prices of all precious metals fell, led by silver. Gold with immediate delivery fell to 50.28 dollars, or 4.2 percent, to 1 138.10 dollars an ounce. This is the strongest decline in the price from 12 January to date. The February gold futures cheaper by 2.1% to 1 163.60 dollars an ounce in electronic trading at the stock exchange in New York. Thursday marked the third straight gold price record only within the last week. Compared to last Friday the price of gold has risen by 1,1 percent. Precious metals will probably noted fourth consecutive weekly increase. Consulting firm Standard Chartered Plc today released a report which shows that central banks are likely to be net buyers of gold this year, which never happened in the past two decades. This week it became clear that Sri Lanka has purchased 10 metric tons of gold from the International Monetary Fund for 375 million dollars. Previously, India and the island countries of Mauritius, respectively, purchased 200 tons of gold reserves of the fund against 6.7 billion dollars and 10 tons of gold to 71.1 million.
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France is now officially part of the gas pipeline project South Stream. This became clear after French energy giant Electricite de France (EDF) signed a contract with Russian gas monopoly Gazprom to join consortium building the gas pipeline South Stream. News was delivered personally by Russian Prime Minister Vladimir Putin, who is visiting in France. We recall that speculation on the participation of France to be strengthened through direct September, and then wrote to the Russian press. At last unofficial information France will take 10% of the company managing the project. At this stage, Gazprom and Italy’s Eni, divided in equal participation in it. The pipeline aims to diversify supply routes of Russian gas to European Union, bypassing Ukraine. Power of the pipeline system will be 63 billion cubic meters. South Stream project envisages the construction of underwater pipe that will link the Bulgarian Black Sea with the Russian coasts. Pipeline from Bulgaria will be divided into two sections. The first would have notified the south of Greece and Italy, and others will continue to the northwest to Central Europe.
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Expanding markets in Central and Eastern Europe will suffer relatively good shocks, created after the credit crunch in Dubai, says an analysis of the Italian UniCredit. The reason for this is that banks in the region are not directly affected, as in Western Europe. Another analysis of Credit Suisse predicts that financial institutions in Western Europe stand to lose nearly 13 billion dollars in the bankruptcy of the Dubai government investment fund Dubai World. According to UniCredit Central and Eastern Europe for short will be negatively affected by debt problems of Dubai as there is an increase in so-called Risk Aversion or willingness to invest in less risky assets. The bank argued that the presence of the IMF in some countries in the region has some stability. In conclusion the bank determines that Eastern Europe will be affected, but only in the short term, not long, and is not expected to have a serious debt problem in the region. Regarded as one of the most brilliant financial centers in the world until a year ago, Dubai is now among the most uncreditworthy countries on the planet. Again according to Credit Suisse analysis of the emirate to the obligations of European banks are more than 13 billion euros. Spark of hope given the solidarity shown by Abu Dhabi. Two banks of the emirate already unlocked $ 5 billion needed for the most urgent needs of Dubai, cited by BNR correspondent in Beirut.
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The European indexes closed in positive territory, trading, fell after concerns about the effect of the Dubai requested postponement of debt payments. Shares of Royal Bank of Scotland, which provided the greatest amount of loans of the Dubai government investment holding company Dubai World from January 2007 onwards, jumped 5.2 percent after yesterday fell to a seven-month minimum. Michelin and Volkswagen shares up led by the automotive sector yesterday after the industrial group of companies for cars and auto parts, included in the index Dow Jones Stoxx 600 slipped 4.3 percent. Stoxx 600 ended the session with an increase of 1,3 percent to 242.85 points, after earlier in the day lost 1.8 percent. Index yesterday reported the strongest decline since April because of the news from Dubai. Major national indexes rose in all 18 western European markets except Luxembourg and Iceland. The UK’s FTSE rose 1% to 5245.73 points, the French CAC 40 advanced by 1,2 per cent to 3721.45 points while the German DAX added 1.3 percent to 5685.61 points.
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The British finance minister Alistair Darling is expected next month to revise downwards its forecast for the presentation of the British economy in 2009. It will do so in the economic report to parliament before the budget discussions for next year, transmits Reuters. Sources from the British finance ministry have shared before the Agency on Thursday that an unexpectedly strong decline in first quarter will likely lead to a contraction of the economy by about 4.75 percent for the year instead of a set in drafting the budget 3.5%. The estimate to restore growth at the end of the year will not be changed. British economy decreased in 6 consecutive quarters, forming the most prolonged recession of at least 50 years, lagging behind other leading economies, are already restored. Reuters sources are moderately cautious in their expectations out of the recession around the end of the year, based on a recent survey by the British Union of Industrialists and data on retail sales in October. “We assume that the economy will show growth of around 0.2% -0.4% in the last quarter,” said a source from the ministry. Darling himself hinted in bringing down its forecast last Thursday, when he declared in parliament that his original forecast was in line with most experts when drafting her. “Since then, new data showed that most economies, including ours, have suffered a serious blow in the first quarter,” the minister said.
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The United States will ultimately be necessary to introduce a national value added tax to reduce its budget deficit, told CNBC on Thursday, Paul Donovan, chief executive and deputy chief economist at UBS. Taxing consumption has never been on the agenda of the United States. “The United States is the only OECD member state without value added tax, but I think I will need to change that at some point,” said Donovan. “This is a cheap way to raise funds, but is not particularly fair since it falls disproportionately on groups with lower income. So perhaps it will require some changes in tax legislation to avoid it. But overall this is a good way to collect money, “continues the economist. Proposals to close the loophole allowing international companies to avoid U.S. income tax at the time of her repatriation, were overshadowed by the U.S. government attempts to stabilize the economy. According to Donovan such proposals have a single effect. They do not contribute to sustainable increases in tax revenues. “We all know that taxes in the United States will increase, but it is frustrating to say the consumer. It is better to leave them to shop with the thought that so far their incomes will be affected, “he reflects. “There is no dispute, however, that consumers will have to reduce their costs, and it in all directions.”
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