Monday 9 November 2009
November 9, 2009 by Andrew Philbrick · Leave a Comment
London, 19.30
Local
The Johannesburg Securities Exchange (JSE), having ended down most of last week, started with a decent rise today. Resources (gold, mining and related) and financial stocks led the way rising by over 2% at the close of trade.
It looks like the recovery is due to two things:
1. The markets looking to recover from the losses of last week
2. Positive news from the United States boosting global markets and the gold price, which has reached $1,100 an ounce!
Indices (at close of trade)
| Index | Value | Rise / Fall |
| All Share | 26,345.01 | +1.59% |
| Top 40 | 23,729.60 | +1.68% |
| Resource 20 | 48,372.21 | +2.22% |
| Industrial 25 | 20,466.64 | +0.26% |
| Financial 15 | 7,118.37 | +2.69% |
Currencies (at close of trade)
| 1 US Dollar buys R7.41 (Rand rose 1.61%) |
| 1 Euro buys R11.11 (Rand rose 0.67%) |
| 1 British Pound buys R12.41 (Rand rose 0.68%) |
International
Indices (at close of trade)
| Index | Value | Rise / Fall |
| Dow Jones Industrial Average (US) as at 3.30pm | 10,280.12 | +1.84% |
| FTSE 100 (UK) at close | 5,232 | +0.33% |
Group of 20 Extend Handouts
The “Group of 20” leading industrialized nations agreed today to extend stimulus packages that are helping to bail out banks and companies suffering from the global recession. This was behind the market rises in developed markets, particularly financial stocks.
What is interesting is that this news contrasts with noises made by the Bank of England and European Central Bank last Thursday (see Thursday’s Market Report), clearly the other Group of 20 members overruled their sentiments.
Prime Buyers are Bank in the US
Numbers from the US housing sector today also showed that things in the “real” economy continue to improve step by step. The number of “prime” mortgages issued is up, that is mortgages to solid creditworthy people and although banks are still not swamped with people buying property, there are more people coming back into buying houses.
Banks Don’t Seem Very Sorry
Hector Sants, Head of the UK Financial Services Authority (FSA), said in an interview with Bloomberg today that the FSA is looking into imposing bans and fines on banks which haven’t taken efforts at introducing measures to curb a repeat of the 2008 financial crisis. In his view, banks haven’t taken collective responsibility for the financial crisis and the FSA is determined to be an intrusive regulator that “judges the judgements” of senior banking executives, and interviews banking executives on their expertise, skills and ethics.
The thing with stimulating an economy…
It is easy to understand why resources have risen today and the Dollar has dropped, with a record gold price it is boom time for mining companies. In my next commentary article I will explore the concept of “printing money”, that is increasing the supply of paper money in the economy and how this devalues a currency and as a result makes people want to buy something more stable (gold). On Thursday, the comments that the money presses would stop from the Governor of the Bank of England, Mervyn King, and Jean-Claude Trichet, President of the European Central Bank strengthened the Dollar but weakened resources such as gold. For the same reason today the opposite news is causing the opposite effect in markets.