Financial Crisis

Financial Crisis

IT Mon, Aug 8

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  • 09:28
    Good morning and welcome to what looks like being another hectic day on the markets. Most European markets are continuing to slide today with the FTSE 100 Falling by 3.5 per cent in early trading and the benchmark DAX Index in Germany down 0.9 per cent. in Dublin, the Iseq market was down over 1 per cent or 27.15. points to 2268.58 at 9.22 am.

    Earlier today, the Nikkei closed down 1.7 per cent, having trimmed losses on bargain hunting after the index tumbled more than 4 per cent in the wake of a plunge on Wall Street last night and a downgrade of US sovereign debt.

    In the US, a sell-off of banking stocks yesterday led US markets downwards, resulting in the Standard Poor’s 500 Index worst day since December 2008, with every stock in the benchmark index ending in negative territory.

    We'll be keeping you up-to-date with all the latest so stay tuned and please feel free to send us your comments.
  • 09:28
    The European Central Bank is actively buying government bonds in the secondary market, ECB president Jean-Claude Trichet said today, urging governments to implement new measures agreed at July 21st crisis talks quickly.

    "We are in the secondary market. I will not tell you moreover what we are buying ... or the amount, but the amounts are known of course and in that sense we are totally transparent," he said.
  • 09:31
    Investors are unlikely to be bouyed by the news from China and Germany today. China's consumer price inflation rose to 6.5 per cent in July, its highest mark since June 2008, according to new figures. Meanwhile, German exports fell 1.2 per cent in June.
  • 09:32
    In local business news - National Irish has reported a pre-tax loss of €400 million in the first half of this year after setting aside €420 million for loan impairment charges. KBC has also warned of possible higher loss provisions in the future because of non-performing Irish loans.

    In more positive news, PayPal has announced 200 new jobs at its European HQ in Blanchardstown.
  • 09:38
  • 09:39
    Here's AP footage of President Barack Obama commenting on S&P's downgrade yesterday. Obama said that no matter what the rating agencies say, "the US will alway be a triple A country."
  • 09:59
    The FTSE 100 has now fallen by 277 points, or nearly 5.5 per cent to 4791 after UK manufacturing data was published. The Office for National Statistics figures show that manufacturing unexpectedly fell in June and the trade gap widened, adding to evidence that the economic recovery is faltering in Britain.
  • 10:04
    Borrowing costs for Italy and Spain are continuing to fall after it was confirmed that the European Central Bank is continuing to buy government bonds today. The yield on 10-year Italian bonds has dropped to 5.11 per cent, while the Spanish rate has declined to just over 5 per cent.

    Ireland's 10-year bond yield is at 9.90 per cent after falling below the 10 per cent mark yesterday for the first time since April.
  • 10:33
    Federal Reserve policy makers are holding a one-day meeting later today in the US. Speculation has grown that the Fed will initiate a third round of quantitative easing (QE) to help the US economy. However, there is growing sceptisim over whether the move will aid investor sentiment.
  • 10:38
    The ECB is losing in a "game of chicken" by buying Spanish and Italian debt instead of holding out for budget cuts and higher taxes, according to UniCredit analyst Stefan Kolek. He says that restarting the bond-buying programme marks the end of a "staring competition" between the ECB and governments which want the central bank to monetise deficits rather than adjust their own budgets.
  • 10:41
    There are rumours circulating that Fed Reserve chariman Ben Bernanke may make an official statement before Wall Street opens at 2.30pm Irish time today.
  • 10:55
    The rout is continuing on European markets with the Iseq down 46.72 points or 1.95% at 2349.001. Elsewhere, the FTSE 100 in London is down 2.5%, the German Dax is down 5.59%, the French CAC is down 3.8%, the Spanish IBEX is down 2.5% and the Italian FTSE MIB is down 2.5%
  • 10:55
    Willie If you ignore rating agencies, then you are left depending on politicians for information, and they generally have little compunction about tailoring the message they give to suit their own ends.
  • 11:31
    Gold hit a record $1,778 an ounce today in its biggest three-day rally since the depths of the financial crisis in late 2008,and its value has risen by about 8 per cent this month as investors seek safer havens.
  • 11:43
    The biggest deficit in the US is credibility rather than credit, according to Harvard University economist Kenneth Rogoff in the 'Financial Times.'

    "Markets can adjust to a downgrade of global growth, but they cannot cope with a spiralling loss of confidence in leadership and a growing sense that policymakers are disconnected from reality," he writes.

    Mr Rogoff has called on the Federal Reserve to move "more decisively" to aid economic recovery in the US.
  • 12:09
    BBC business journalist and Dubliner Joe Lynam (@BBC_Joe_Lynam) has just tweeted that South Korea has banned short selling of equities for three months to cut market volatility. He says there are rumours some EU markets may do likewise soon.
  • 12:11
    The Organisation of the Petroleum Exporting Countries (Opec) has cut its forecast for global oil demand growth this year as the worsening economic crisis curbs consumption in developed economies.

    World oil demand will increase by 1.21 million barrels per day (bpd) in 2011, Opec said in the report, 150,000 bpd less than expected last month. Growth next year was lowered only marginally, by 20,000 bpd to 1.30 million bpd.
  • 12:36
    Like other European markets the Iseq has been in negative territory for most of the day but it has now rallied and is up 18.77 points to 2414.50
  • 13:18
    European markets are mixed this afternoon. The Iseq is currently up 20.51 points at 2416.24. The FTSE 100 Index rose 0.1 per cent to 5,076.14 at lunchtime after earlier sinking as much as 5.5 per cent. But it has since fallen by 0.4 per cent to 5,049.03 at 12:52 pm. The DAX in Germany is down 1.6 per cent while the CAC40 in France is up 0.786 per cent.
  • 13:45
    US President Obama might think that S&P was wrong to downgrade the country's credit rating but the 'Washington Post' backs the agency.

    "For all of its faults, S&P was right about its assessment of the problems that underlie the US economy, " it says in an editorial. Read the full article here:
  • 13:54
    In further bad news for the UK economy following this morning's manufacturing output figures, the British Retail Consortium has warned that the riots which have been seen across London and other cities has had a devastating impact on small businesses. The organisation said retailers face tens of millions of pounds in costs and losses following rioting, looting and arson in recent days.
  • 14:07
    Kudos to my colleague George for a link to these excellent maps showing how Moody's, S&P and Fitch rate each country's credit rating:
  • 14:14
    US stock index futures are pointing to a gain of about 1 per cent at the open today in a rebound from the previous session's nosedive, but analysts suggest an upcoming Fed statement could spark a reversal if investors are not convinced it has a plan to combat a market meltdown
  • 14:22
    Bloomberg is reporting that the German economy minister Philipp Roesler has proposed a euro zone "stability council" to oversee efforts by struggling member countries to cut debt and boost competitiveness in order to calm the markets. The council would be part of a overhauled stability pact, he told reporters in Berlin
  • 14:32
    The Dublin market was down by over 2.5 per cent earlier today but is currently up 1.2 per cent or 30.15 points to 2425.88. The FTSE 100 Index is slighty up after sinking as much as 5.5 per cent this morning. The DAX in Germany is down nearly 1 per cent while the CAC40 in France is up almost 2 per cent
  • 14:39
    Wall Street has opened and US stocks are up. The Dow Jones has gained 105.96 points, or 0.98 per cent, to 10,915.81. The Standard & Poor's 500 rose 12.53 points, or 1.12 per cent, to 1,131.99. The Nasdaq has climbed 36.31 points, or 1.54 per cent, to 2,394.00
  • 14:52
    Federal Reserve policymakers have begun their meeting in the US. It had been rumoured that Fed chairman Ben Bernanke was intending to make an official statement before markets opened this afternoon. That hasn't happened but a policy statement is expected shortly after 7pm Irish time.
  • 15:28
    British chancellor George Osborne is to make a statement to parliament about the state of the economy on Thursday, it was confirmed today. Mr Osborne, who has been criticised for being away in the US for the last week, has cut short his holiday to return to Britain
  • 15:34
    US stocks continue to rebound with the Dow Jones up 1.95 per cent, the S&P 500 up 2.34 per cent and the Nasdaq up 3 per cent. However, European markets are mixed with the Iseq, FTSE 500 and CAC40 all up but the German Dax, the Spanish Ibex and the Italian FTSE MRBI are all down.
  • 16:16
    Although stock markets have rebounded there's little confidence about and all eyes are on a statement from the US Federal Reserve. We are expecting a statement around 7.15pm Irish time after a scheduled meeting of the policy setting Federal Open Market Committee. "Investors are looking for stability. They didn't get it from the government, so the only place they can turn is the
    Fed," said Cort Gwon, chief strategist at HudsonView Capital Management. "If there's no indication of help, selling could come back."
  • 16:41
    Irish market looks like it will be one of the best performing in Europe today. At the close it is up 2.3 per cent. The FTSE 100 in London is up 1.21 per cent, Germany's DAX is down about 0.5 per cent, while the CAC 40 in Paris gained 1.6 per cent
  • 16:44
    Britain's financial regulator has said banks should prepare "living wills" outlining how they can be broken up with the least economic disruption of they fail. The Financial Services Authority said lenders should be able to be shut down without roiling markets or requiring public support and bondholders should also bear part of the costs of closure.
  • 17:19
    Citigroup chief executive Vikram Pandit said the bank has "unparalleled resources" to withstand the current turmoil and that the company is now "fundamentally different" than it was during the financial crisis. "Although the decline is difficult to watch and naturally reminds all of us of what happened several years ago, there is little similarity between now and then in both drivers
    and implications," Pandit said in a voice-mail he left for staff before markets opened this morning. Citi's shares were down 16 per cent yesterday.
  • 17:44
    And on a lighter note Business Insider is reporting a plane flew past the Standard & Poor's offices in New York this morning with a banner reading "Thanks for the downgrade. You should all be fired"
  • 18:02
    The Iseq index of Irish shares has officially closed at 2,459.30, a gain of 2.65 per cent
  • 18:13
    The concern is that we are seeing a "dead cat bounce" today and that markets will resume their downward trajectory tomorrow. The phrase doesn't refer to the Irish comedy group of the same name. It's a Wall Street phrase describing a brief rally in the price of an equity after a heavy sell off.
  • 18:30
    Another positive note: the US has sold $32 billion of three-year bonds at the lowest yield since records began in 1981. The yield, or interest rate sought by investors, was 0.5 per cent in the first securities sale since S&P downgraded the US credit rating.
  • 18:51
    With a US Fed announcement on interest rates, and hopefully some other measures to calm the markets, about 25 minutes away the Dow is up 1.7 per cent in New York and the more tech-focused Nasdaq is up 2.1 per cent
  • 18:57
    The live blog is coming to an end for today but details of the Fed announcement will be carried elsewhere on the site.