Market iQ - 2012-07-19

 

United States 

 

The week ending July 13, 2012, highlighted data on consumer credit, the trade balance and confidence levels. Consumer credit climbed more than forecast in May, led by the biggest jump in credit-card debt in almost five years. The US$17.1 billion increase followed a US$9.95 billion gain the previous month. A pickup in borrowing coincides with a slowdown in hiring and declines in consumer confidence, which indicate the job market is failing to spur enough gains in wages to cover expenses.

The trade deficit for the month of May narrowed as falling crude oil prices and weakening demand for consumer goods trimmed the import bill. The gap shrank 3.8 per cent to US$48.7 billion in May from a deficit of US$50.6 billion a month earlier.

Purchases from abroad fell to the lowest level in three months, while exports climbed to the second-highest on record. 

Slowing global growth, which led central banks from Europe to China to cut interest rates and announce more stimulus, may signal American companies may have a harder time boosting overseas sales. At the same time, an increase in imports of business equipment indicates sustained investment in the US, and more inbound shipments of cars point to continued strength in the auto industry. In terms of confidence levels, the Thomson Reuters/ University of Michigan index dropped to 72.0 this month from 73.2 in June. The unexpected decline to the lowest level this year reflects Americans growing pessimism about their finances. The weakest quarter of hiring by companies in two years, along with stock market volatility tied to Europe’s debt crisis, threaten to hold back the household spending that accounts for about 70 per cent of the economy. 

Sales at retailers are likely to slow as fewer consumers expect their incomes to increase.

 

Europe

 

German lawsuits: Following extensive hearings, the German Federal Constitutional Court has announced  it will issue a ruling on lawsuits aimed at halting Germany’s participation in the European Stability Mechanism and the fiscal pact on September 12. The lawsuits argue that the proposed legislation transfers constitutionally mandated authority from German lawmakers and undermines democratic rule. With the launch of the ESM delayed, EU Officials will only have access to the 240 billion euro remaining in the European Financial Stability Facility.

 

Greece: On August 20, 2012, Greece will have to repay 3.1 billion euro for two maturing bonds. In order to avert a possible default, Euro-area finance ministers will meet on July 20, 2012, to consider ways to prevent this possibility. The ECB owns 100 per cent of the first 551 million euro issue and 97.5 per cent of the second 2.6 billion euro issue (the remainder is held by the European Investment Bank and the European Union).

 

Spain: Also up for discussion at the July 20 meeting will be Spain’s bank recapitalisation. As much as 100 billion euro has been requested for Spain’s banks, with reports indicating 30 billion euro may be signed off at the meeting.

 

Weekly International Equity Watch

 

US stocks erase losses on final trading day of the week

Increasing concern about company earnings and the health of the global economy weighed on stocks early in the week as investors looked to central banks to provide some evidence of additional stimulus measures to spur growth. The S&P 500 index closed the week 0.16 per cent higher to a close of 1,356.78 boosted by stocks in the healthcare and constructions materials sectors. The Dow Jones index increased by 0.04 per cent with JPMorgan Chase being the best performing stock on the index as its share price jumped 6.4 per cent on reports that the bank with probably post record earnings for 2012 even after reporting a US$4.4 billion trading loss and 1.47 per cent, respectively, for the week. The Nasdaq Composite index fell 0.98 per cent to 2,908.47, but is up 11.64 per cent, year-to-date, as at July 13, 2012. 

 

 

Rally continues for European stocks

Speculation of support via additional stimulus to the European economy from the central bank led to an overall rise in European stocks. The Stoxx Europe 600 Index increased by 0.73 per cent week-on-week to 256.26 recording a five per cent return year-to-date. Germany’s Dax and UK’s FTSE 100 index closed 2.3 per cent and 0.06 per cent higher for the week to 6,557.10 and 5,666.13, respectively. 

 

 

T&T stock market
TTSE Composite Index sees weekly gain

The Composite Index saw a marginal increase during the week ending July 13, rising by 0.46 per cent to a value of 1,033.47, as 10 stocks advanced and four declined. Scotiabank T&T (SBTT) was the weekly volume leader with 607,310 shares trading at a closing price of $62. National Enterprises Ltd (NEL) saw the largest price appreciation rising by 4.88 per cent during the week to a close of $13.75. Jamaica Money Market Brokers Ltd (JMMB) saw the largest price decline falling by 1.22 per cent during the week to a close of $0.81. Year-to-date, the TTSE Composite Index is up 2.03 per cent.