REF : Compass Global Markets - Friday 25th May 2012
"Italian Prime Minister Mario Monti could well receive the award for most optimistic European leader as he told viewers on Italian TV that most participants at the latest European Union Summit supported the concept of a joint Eurobond and that Greece would not be leaving the eurozone. The comments have seen US equity markets pare losses late in the New York trading session. Monti went as far as to say that Italy could convince Germany to accept the idea of collective debt for the “common good” of Europe. We wish Monti all the best of luck in his quest but fear that he has a greater chance of finding El Dorado and solving the European debt crisis with the legendary treasure than he has with getting Germany to assume the debt of her not so economically sound cousins. The EUR continues to plunge and has opened the morning at 1.2535.
As opinion polls in Greece showed that the Syriza Party, which is opposed to the implementation of Greece's international rescue, is extending its lead in the prelude to the new elections to be held on June 17, more data releases point to a worsening slump across Europe. Manufacturing and services output dropped in May across the euro zone and Germany business confidence fell. All the recent data releases are pointing to a second quarter GDP contraction in the eurozone. Furthermore, the news was also sobering in the UK with the gross domestic product falling more than expected by 0.3% in the first quarter. Slowing manufacturing in China and worst than expected data releases from Japan have also weighed on markets. The Australian dollar has held up remarkable well and opens the morning at 0.9760.
US share markets staged a late recovery to reverse loses of as much as 0.6% on the back of the Italian Prime Minister's wishful thinking. Earlier, markets had fallen as reports surfaced that China's biggest banks would fall short of loan targets for the first time in seven years as the economy slows. After falling below its 150 day average, the S&P 500 may finally stabilise as it closes 0.14% higher at 1,321. Earlier in Europe, bourses recovered from recent heavy losses to close higher with the DAX gaining 0.48% while the FTSE rose 1.58%. The Hang Seng and the ASX 200 closed lower.
Commodity prices have arrested recent heavy falls with the CRB index gaining 0.48 points to 281.92. WTI has recovered to hold above $90 as international negotiators begin discussions with Iran over its nuclear programme. WTI opens the morning at $90.90. Precious metals have gained even as the Dollar continues to rise against the EUR. Gold has risen 0.7% to $1,562 while silver surged 2.7% to $28.25. Soft commodities are broadly higher while copper has gained 1.22%."
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
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