Raise Partner - RP Market Watch

RP Market Watch

Choose :

(38 à 38 sur 48)

Rough weaning for the Equity markets

Posted on 18-Dec-2007

Tuesday December 11th, the Fed did not live up to the expectations of the majority by conceding a 25 bps rate-cut. This move caused the equity market to back-off 2% in a few hours, as a sign of protest and frustration.
So as to appease the lack of liquidity on the markets, 5 central banks came to an agreement to set up a new liquidity attribution bid system: the Fed, the BCE, the Banks of England, Canada and Switzerland.
Even if this new source of liquidity adds up to around USD 80 Billions, it is not considered as sufficient by financial institutions: the Euribor rate is still close to 4,95% whereas under normal circumstances it should be around 4.25%.

The world economy is in a delicate situation: inflation in Europe and in the US is still high, and at the same time the economical growth is threatened. The Consumer Price Index (CPI), published by the US department of state last Friday, went up 4.3% over the past year instead of the 4.1% growth which was expected. It is the most important increase since June 2006. In Europe, according to an estimation published by the BCE Friday December 14th , inflation reached 3.1% in November in the Euro zone, way over the 2% objective aimed at by the BCE.

In this context, the breathing space of the central banks is narrowing, as the rise in cost is among the main factors influencing the consumption. Between financial actors and consumers, the central banks may favour the latter in the upcoming months…