Equities rebound, $ recovers
Towards balance: French Budget Minister Eric Woerth (L) speaks with German Budget Secretary Thomas Mirow (R) as an unidentified aide smiles before a Budget Council meeting yesterday at EU headquarters in Brussels. Picture: AFP
Saturday, November 24, 2007
EQUITY markets bounced yesterday on talk of new merger and acquisition activity while the dollar swung sharply, first plumbing new record lows against major currencies and then rebounding.
European and Asian shares shrugged off recent weakness, and US markets looked set to follow suit.
Trading was thinner than usual with Japanese markets closed for a holiday and Wall Street likely to see absentees the day after Thanksgiving.
The dollar was much in focus, hitting various new lows early and briefly coming close to US$1.50 to the euro as concerns about the US economy rattled investors.
But a gloomy prognosis for the euro zone from a European Central Bank member toppled the euro well off its high of US$1.4966, a new record.
The euro was later down around a third of a per cent against the dollar at US$1.4810.
The dollar's ongoing decline, however, is still very much a factor, leading to the earlier low against a basket of six major currencies, essentially its weakest position globally since the modern currency regime began in the early 1970s. It also hit an all-time low against the Swiss franc and was at 2-1/2 year lows against Japan's yen.
Yesterday's rebound against the euro was viewed in some quarters as temporary. "We expect the dollar to breach the US$1.50 level soon," said Johan Javeus, FX strategist at SEB Merchant Banking.
One key to the future direction of the euro and dollar, however, will be the state of the euro zone economy.
Bank of Spain Governor and European Central Bank council member Miguel Angel Fernandez Ordonez said while there were some medium-term inflation risks in the euro zone, world financial turmoil threatened a stronger-than-expected slowdown.
"The comments reem- phasise that while the market has been preoccupied with US economic weakness the US is not alone in suffering and the euro zone will struggle or at least decelerate next year as well," said Jeremy Stretch, market strategist at Rabobank.
Equity markets were generally bullish, helped by a fresh wave of merger and acquisition talk.The FTSEurofirst 300 index of top European shares was up 0.9 per cent, having rallied 0.7 per cent on Thursday.
"It's a cautious rebound," said Jean-Francois Virolle, chief strategist at Global Equities, in Paris.
M&A talk focused on the recently hammered financial and mining sectors.
France's CNP Assurances jumped nine per cent after French newspaper Les Echos reported insurer Axa was eyeing its smaller rival. Axa gained two per cent.
Axa was not available to comment and CNP declined to.M&A also looked set for a role when US markets opened.
UAL Corp, parent of the No 2 US carrier, United Airlines, could be in focus after BusinessWeek cited industry experts as saying it is keen for a possible merger. Reuters
European and Asian shares shrugged off recent weakness, and US markets looked set to follow suit.
Trading was thinner than usual with Japanese markets closed for a holiday and Wall Street likely to see absentees the day after Thanksgiving.
The dollar was much in focus, hitting various new lows early and briefly coming close to US$1.50 to the euro as concerns about the US economy rattled investors.
But a gloomy prognosis for the euro zone from a European Central Bank member toppled the euro well off its high of US$1.4966, a new record.
The euro was later down around a third of a per cent against the dollar at US$1.4810.
The dollar's ongoing decline, however, is still very much a factor, leading to the earlier low against a basket of six major currencies, essentially its weakest position globally since the modern currency regime began in the early 1970s. It also hit an all-time low against the Swiss franc and was at 2-1/2 year lows against Japan's yen.
Yesterday's rebound against the euro was viewed in some quarters as temporary. "We expect the dollar to breach the US$1.50 level soon," said Johan Javeus, FX strategist at SEB Merchant Banking.
One key to the future direction of the euro and dollar, however, will be the state of the euro zone economy.
Bank of Spain Governor and European Central Bank council member Miguel Angel Fernandez Ordonez said while there were some medium-term inflation risks in the euro zone, world financial turmoil threatened a stronger-than-expected slowdown.
"The comments reem- phasise that while the market has been preoccupied with US economic weakness the US is not alone in suffering and the euro zone will struggle or at least decelerate next year as well," said Jeremy Stretch, market strategist at Rabobank.
Equity markets were generally bullish, helped by a fresh wave of merger and acquisition talk.The FTSEurofirst 300 index of top European shares was up 0.9 per cent, having rallied 0.7 per cent on Thursday.
"It's a cautious rebound," said Jean-Francois Virolle, chief strategist at Global Equities, in Paris.
M&A talk focused on the recently hammered financial and mining sectors.
France's CNP Assurances jumped nine per cent after French newspaper Les Echos reported insurer Axa was eyeing its smaller rival. Axa gained two per cent.
Axa was not available to comment and CNP declined to.M&A also looked set for a role when US markets opened.
UAL Corp, parent of the No 2 US carrier, United Airlines, could be in focus after BusinessWeek cited industry experts as saying it is keen for a possible merger. Reuters
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