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Market research | 29
Market research
from Internaxx
November 2009
This section is brought to you by the Luxembourg
based online broker Internaxx. Market analysis is
provided by Fortis Investments, the asset
management arm of the BNP Paribas Fortis group.
Weak US data reminder of muted recovery
(source: Fortis Investments)
he US released more for-clunkers” programme and consumers August and household spending surged, making
T
disappointing data, while the spending savings. The increase in savings which it look as if a domestic recovery has started. But
economies of the eurozone and may be needed to repair household balance sheets with labour cash earnings declining and
Japan did not show many signs of has stalled. Thus, the rise in consumption looks consumer prices firmly deflating, we remain
improvement. The market to be only temporary. Among the ISM indices, cautious.
reaction was actually muted: the manufacturing index eased, but held firmly Australia’s central bank raised interest rates by
developed equities fell by only above 50. The non-manufacturing index rose to 25 bps to 3.25%. This is the first increase in one
2.4% last week. This reinforced our view that above 50 for the first time since August 2008. of the larger economies. Australia’s economy has
many investors are still waiting to buy at Both signal that the US economy should recover escaped a recession and while unemployment
suitable points. We expect a continued further. rose to 6.1% in March, it has since fallen to 5.5%
economic recovery, low inflation and Eurozone retail sales fell, but not by as much as in August. One could argue that the RBA was too
stimulative monetary policy to support earlier this year. Consumer confidence was weak, aggressive by cutting rates from 7.25% in
equities for now. After US services sector given that households have to cope with rising September 2008 to 3% in March, but one has to
confidence data came in higher than expected, unemployment. But eurozone households should bear in mind that the cuts were part of global
investors saw a buying opportunity, allowing be in a better position than their US emergency actions to prevent the financial crisis
the market to reverse most of the correction. counterparts. The rise in unemployment has been from turning into a depression.
Data showed the US economy shed 263,000 less sharp than in the US. Furthermore, Who is set to follow Australia’s example?
jobs in September, while the August and July households generally do not face falling house Norway is often cited. Its economy experienced a
numbers were revised lower. The unemployment prices and savings are higher. However, a relatively mild recession. Most importantly for
rate rose to 9.8%. The participation rate and consumer-led bounce in the eurozone would be a oil-exporting Norway, oil prices have surged from
weekly hours worked fell to record lows. This major change from previous recoveries. their lows around the turn of the year. The
weak report clearly does not fit into our positive At 54.5, Japan’s PMI reached the highest level Norges Bank’s baseline forecast includes rate
near-term view. However, one has to keep in in three years. The Tankan survey of business hikes early next year. The Bank of Korea might
mind that average job losses are becoming conditions improved for the second straight hike rates soon. With the economy rapidly
smaller. We see the data as a reminder that a quarter. The advance has been more pronounced recovering to pre-crisis levels and inflation rising,
strong recovery should not be taken for granted. among export-oriented manufacturing firms interest rates of 2% could soon prove to be too
August consumption was actually strong, than among domestic-oriented services low.
fuelled by high car sales on the back of the “cash- companies. Unemployment surprisingly fell in In our view, the Federal Reserve and the ECB
www.investmentinternational.com November 2009 Investment International
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