United States: During the week ending July 22, housing market data for June was released. Housing starts for the month of June increased 14.6 per cent following a flat performance in May. The pick up in activity largely reflected an improvement from previous months. Bad weather hindered the production of homes in previous months, and the improvement in June reflected better weather conditions, which allowed for the continuation of delayed projects. Existing home sales declined in June to a seven month low as the industry continues to struggle with rising unemployment and foreclosures. Purchases dropped 0.8 per cent to a 4.77 million pace. The forecast called for a 1.9 per cent increase to 4.9 million. Overall, while housing starts show some stabilisation in construction, declining home values and delays in processing foreclosures mean it may take some time to clear the market of distressed properties.
The stalemate with the US debt ceiling still continues as Congress is yet to arrive at a consensus to increase the debt ceiling. Discussions held over the weekend were no closer to arriving on a decision. With the deadline of August 2 fast approaching, thus far, the markets have not shown much reaction. However, as the week closed, US 30-year treasury yields have increased indicating some sell off as the risk of default weighs in on investors, especially on the long end of the curve. Despite this, the markets show some optimism about the stalemate as Treasuries generally point toward lower yields. Growth in the economy is stalling and investors seem to be drawn to Treasuries, hence pushing yields lower. The market is, therefore, weighing the outcome of weak growth and risk of default, and so far, growth outlook appears to be the overriding factor. Looking ahead to the week July 22 to 26, additional housing data, confidence levels and second quarter estimates are expected.
Europe
An agreement was reached on a financial aid package for Greece on July 21, 2011. The 159 billion euro package includes 50 billion euro in bond exchanges and buybacks from private investors. The Euro zone's bailout fund and the International Monetary Fund will lend the country 109 billion euro over the next three years at around 3.50 per cent interest. Private creditors who hold Greek debt due to mature in the coming years, will have the option to accept new bonds at lower coupon rates with maturities in 2015 or 2030.
Credit rating agencies have warned that such a plan would be interpreted as a default. Fitch Ratings has said that it would lower Greece to restricted default when the debt exchange is executed, however, it would raise the rating after the new bonds are issued. Additional changes will now allow the bail-out fund to help countries that have not requested assistance and allow the European Financial Stability Facility to buy government bonds on the secondary market.
Bahrain
Bahrain was removed from Standard and Poor's negative CreditWatch on July 20. The country's foreign and local currency ratings remain unchanged. The rating agency cited "the diminished near-term political tensions" and its "expectation that increased public spending will lift economic growth next year," as its rationale for the change.
Greece
Moody's Investor Services downgraded Greece's local and foreign currency ratings on July 25. The country's long-term ratings fell from Caa1 to Ca. According to the rating agency, "The combination of the announced EU programme and the debt exchange proposals by major financial institutions imply that private creditors will experience substantial losses on their holding of Greek government bonds and this is something we need to reflect in the rating," Standard & Poor's recently downgraded Greece from B+ to CCC on July 13, 2011.
Weekly International Equity Watch
United States
The US market had a welcomed week of gains, ending July 22, with the three major US stock indexes posting gains. The Dow Jones Industrial Average ended the week up 1.6 per cent to 12,681, and the S&P 500 Index finished the week with a gain of 2.21 per cent. The Nasdaq Composite Index closed the week up 2.5 per cent to 2,858. This increase was led by a generally strong streak of positive earnings reports for several companies, which seemed to signal an improvement in growth for the remaining quarters for the year. Caterpillar was the major stock down on the Dow, with a 5.8 per cent fall in price which pulled the index downward on Friday. However, this was not enough to suppress gains experienced earlier in the week. Technology stocks continued to perform well, faring the best on the S&P among the ten industry groups. With the Nasdaq also posting gains for the week, tech companies on both exchanges that posted gains included Advanced Micro Devices Inc, SanDisk Corporation, and Microsoft. Despite the growing debt concerns, strong earnings reports remained the predominant story in the markets, with the indexes all posting weekly gains led by strong earnings reports by companies, such as McDonalds, Apple Inc, Coca-Cola Company and IBM Corporation.
Europe
The MSCI World Equity Index was up 0.34 per cent on the July 22 and up 2.67per cent on the week. European markets were also up for the week, following the bailout package announced by leaders of the Euro-Zone. The Stoxx Europe 600 Index rose for the first time in three weeks by 3.7 per cent to close at 272.02 for the week. The United Kingdom benchmark Index, the FTSE, opened the week at 5,752.81 and closed at 5,935.02 posting a weekly gain of 3.2 per cent. Germany's Dax was also up 1.6 per cent for the week. Major European banks posted gains led by Greek banks and Vodafone which rose 2 per cent as Europe also closed the week on a high.
Asia
Asian stocks also followed the global rally in markets as the Greek bailout plan led solid share gains in the region especially in the major banks. Hong Kong's Hang Seng Index closed the week up 2.6 per cent. The Nikkei 225 index was also up for the week rising from 9,889.72 to close at 10,132, a gain of 243 points or about 2.5 per cent. Contrary to the general trend in the markets, the Shanghai Composite Index finished the week with a 1.8 per cent loss, snapping a four-week rally, amid worries of an economic slowdown and high inflation.
T&T Composite Index rises to 958.24
The Composite Index increased during the week ending July 22, rising by 0.36 per cent to a value of 958.24 as ten stocks advanced and five declined. Sagicor Financial Corporation (SFC) was the weekly volume leader with 170,472 shares trading for the week at a closing price of $7.76, up $0.01 from the week before. Scotia Investment Jamaica Ltd saw the largest price appreciation, rising by 23.33 per cent during the week to a close of $1.85. Year-to-date the TTSE Composite Index is up 14.67 per cent while the All T&T index is up 18.04 per cent.