Subprime issue in the financial markets and your shares
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raincool2005
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World equities jump, oil prices surge after Fed medicine
Posted: 19 September 2007 2130 hrs
LONDON : Global equities surged Wednesday, oil prices raced towards another record high and the euro neared its best-ever level against the dollar as markets reacted to a hefty US interest rate cut.
Around the world, stock market investors cheered the Fed decision to cut the federal funds rate by a half-point to 4.75 percent to boost the flagging United States economy and ward off the global credit squeeze.
European stock markets soared Wednesday following bumper gains overnight in New York and earlier in Tokyo as investors welcomed the US medicine, which was the first cut in the Fed's benchmark rate in four years.
"The general consensus was for a 25 basis point cut, even though some analysts were predicting a 50 basis point move," said analysts at the Sucden brokerage in London.
"As a result, stock markets rallied, helping commodity markets amid fresh optimism over the future of the US economy."
But the rate cut was bad news for the dollar. The European single currency hit an historic 1.3988 dollars on Tuesday and remained within striking distance of 1.40 dollars on Wednesday.
New York oil prices -- which hit a record high 82.38 dollars per barrel on Tuesday -- held above 82 dollars per barrel as the rate cut eased concerns that a possible global economic slowdown would dampen energy demand.
Elsewhere in London, gold prices surged to 726.70 dollars per ounce, last seen May 2006, as the precious metal was boosted by the weak dollar and runaway oil prices.
Wall Street had rallied Tuesday after the Federal Reserve moved to ease tight credit and housing market distress.
Investor sentiment is boosted by lower interest rates because they cut loan repayments for companies and therefore help to lift profits. They also boost consumers' disposable incomes.
Global markets closely track changes to US borrowing costs because the United States is the world's biggest economy.
Asian and European stocks followed Wall Street's lead, posting sharp gains Wednesday.
However, there were concerns about how long the rally would last given the steady trickle of bad news linked to problems in US sub-prime home loans to risky borrowers.
"The party will continue around the world at least for today but it won't last forever," said Fumiyuki Nakanishi, analyst at SMBC Friend Securities in Tokyo.
"The fundamental problems with the sub-prime loans and fears of credit crunch have yet to disappear," said Nakanishi.
Tokyo surged almost 3.7 percent with the biggest points gain in five and a half years as a decision by the Japanese central bank to refrain from hiking its own interest rates provided additional relief for the market.
European stock markets rocketed higher, with Paris up 2.37 percent, Frankfurt jumping 1.90 percent and London rising 2.16 percent in value.
Elsewhere, Amsterdam, Madrid, Milan and Zurich markets all posted healthy gains of about 2.0 percent.
While stocks reacted positively to the Fed move, there was caution about whether it would resolve the credit market problems caused by rising defaults in the sub-prime mortgages to risky borrowers in the United States.
Some economists said a large cut might fuel inflation or bring back the easy-money conditions that created the problems.
Among other Asian stock markets, Seoul closed 3.5 percent higher, Sydney added 2.6 percent and Mumbai soared by 4.17 percent to a new record close above 16,000 points.
Hong Kong share prices also finished at a record high, winning almost 4.0 percent in value
Posted: 19 September 2007 2130 hrs
LONDON : Global equities surged Wednesday, oil prices raced towards another record high and the euro neared its best-ever level against the dollar as markets reacted to a hefty US interest rate cut.
Around the world, stock market investors cheered the Fed decision to cut the federal funds rate by a half-point to 4.75 percent to boost the flagging United States economy and ward off the global credit squeeze.
European stock markets soared Wednesday following bumper gains overnight in New York and earlier in Tokyo as investors welcomed the US medicine, which was the first cut in the Fed's benchmark rate in four years.
"The general consensus was for a 25 basis point cut, even though some analysts were predicting a 50 basis point move," said analysts at the Sucden brokerage in London.
"As a result, stock markets rallied, helping commodity markets amid fresh optimism over the future of the US economy."
But the rate cut was bad news for the dollar. The European single currency hit an historic 1.3988 dollars on Tuesday and remained within striking distance of 1.40 dollars on Wednesday.
New York oil prices -- which hit a record high 82.38 dollars per barrel on Tuesday -- held above 82 dollars per barrel as the rate cut eased concerns that a possible global economic slowdown would dampen energy demand.
Elsewhere in London, gold prices surged to 726.70 dollars per ounce, last seen May 2006, as the precious metal was boosted by the weak dollar and runaway oil prices.
Wall Street had rallied Tuesday after the Federal Reserve moved to ease tight credit and housing market distress.
Investor sentiment is boosted by lower interest rates because they cut loan repayments for companies and therefore help to lift profits. They also boost consumers' disposable incomes.
Global markets closely track changes to US borrowing costs because the United States is the world's biggest economy.
Asian and European stocks followed Wall Street's lead, posting sharp gains Wednesday.
However, there were concerns about how long the rally would last given the steady trickle of bad news linked to problems in US sub-prime home loans to risky borrowers.
"The party will continue around the world at least for today but it won't last forever," said Fumiyuki Nakanishi, analyst at SMBC Friend Securities in Tokyo.
"The fundamental problems with the sub-prime loans and fears of credit crunch have yet to disappear," said Nakanishi.
Tokyo surged almost 3.7 percent with the biggest points gain in five and a half years as a decision by the Japanese central bank to refrain from hiking its own interest rates provided additional relief for the market.
European stock markets rocketed higher, with Paris up 2.37 percent, Frankfurt jumping 1.90 percent and London rising 2.16 percent in value.
Elsewhere, Amsterdam, Madrid, Milan and Zurich markets all posted healthy gains of about 2.0 percent.
While stocks reacted positively to the Fed move, there was caution about whether it would resolve the credit market problems caused by rising defaults in the sub-prime mortgages to risky borrowers in the United States.
Some economists said a large cut might fuel inflation or bring back the easy-money conditions that created the problems.
Among other Asian stock markets, Seoul closed 3.5 percent higher, Sydney added 2.6 percent and Mumbai soared by 4.17 percent to a new record close above 16,000 points.
Hong Kong share prices also finished at a record high, winning almost 4.0 percent in value
Look at Singapore Property Market, it is still going strong despite talk about bubble building up. A few months, HDB Minister assured that property market was well in controlled, not to worry. How many Singaporeans are defaulting their housing loans comparing to the Americans?
Both sale and rental of properties, be it private or office are still high.
Both sale and rental of properties, be it private or office are still high.
It will not be strong for long.
There are alot of enbloc sales and new buildings going to build next yr.
Which means by end of the completion, you will see lots of apartments coming up by late 2008-2009.
When supply is more than demand, the property cycle will come down again.
Btw, any ministers or politicians will say some assurance words to comfort the investors confidence....no one will say how badly the market is.
A lot of factors have to consider.
:lovegrin: Erm, why the sudden talk about Singapore property? The talk is all about US mortgages now, not Singapore.
All I know is that supply will grow by 2009 as many projects will have completed by then, that is when property prices in Singapore are expected to cool down. Until then, property prices are expected to remain firm or tread up, baring any unforseen situations. I spoke to a property agent two weeks back, he mentioned that the property market has gone soft ever since the stock markets started to nosedive.
Bro, I am using another example closer to home instead of focusing on just US. Subprime problem is not from Singapore. I am using Singapore Property market as an illustration that prices are still going up but the magnitude may have slowed down. Hence, stock market in Singapore is still very bullish due to favourable domestic factors, etc.
raincool2005
Senior Member
Are they the one who feed the banks and make them fat? ;p
The prices for the housing is getting ridiculous. Getting a decent 4 to 5 rooms HDB flat means the average income couple have to slog for the next 20 to 30 years....
raincool2005
Senior Member
Are they the one who feed the banks and make them fat? ;p
The prices for the housing is getting ridiculous. Getting a decent 4 to 5 rooms HDB flat means the average income couple have to slog for the next 20 to 30 years....
personally, i feel that in Singapore no matter how big your flat is, you are still sharing a common roof with a lot of people ! a flat is still a flat. :bsmilie:
Getting a decent 4 to 5 rooms HDB flat means the average income couple have to slog for the next 20 to 30 years....
Buy within your means and also at the RIGHT timing.
Buying a property at the peak is as good as losing money.
Still can remember the story of someone paying 600 or 700k for a bishan flat.....
Buy within your means and also at the RIGHT timing.
Buying a property at the peak is as good as losing money.
Still can remember the story of someone paying 600 or 700k for a bishan flat.....
Even not during peak, the pricing is still consider high for a cage.
Look, based on last year price, a 4 room HDB is about 400k++ in Tao payoh.
Assuming a couple with a combine average income of 7.5k per month and
each with 3 months bonus which include AWS.
Their total annual CPF, OA contribution would be estimated to be $24000
It will take them 400k/24k = 17 years (loan interest not counted yet).
With current higher pricing, its crazy!
Yes, everyone knows that US is Singapore major trading partner. Being an export oriented country, Singapore is very vulunerable to US economic changes.
Like what I have said before, do not jump to any conclusion until there is clear sign that US economy is indeed slowing down. We need to see a few quarters of economics data of US in order to determine it.
Nowadays bec of the media, many people are sort of misled that US is going into recession. This is simply unfounded unless there are evidences to substantiate it.
It will not be strong for long.
There are alot of enbloc sales and new buildings going to build next yr.
Which means by end of the completion, you will see lots of apartments coming up by late 2008-2009.
When supply is more than demand, the property cycle will come down again.
Btw, any ministers or politicians will say some assurance words to comfort the investors confidence....no one will say how badly the market is.
A lot of factors have to consider.
Yes, based on historical data, any boom will not last forever. Just like 1996 Property Boom.
The issue here is the demand was very strong since last year until this year. It's a cycle.
Yes, no doubt the magnitude is not as great as last year, but it is certainly still positive in the property market expecially the private properties.
But then again, it isn't wise to assume that the Singapore economy can reamin on an uptrend with all that is going on around, we may end up with a mixed-bag kinda situation i.e. not good, but not bad either.
Bernake's testimony is evident that even he cannot gauge the degree of the problem precisely, and quoted from BBC,
'The rate cut was made "to help forestall some of the adverse effects on the broader economy", he said.'
That, along with pumping cash into the financial system, aimed to counter "significant market stress" he said.'
A housing slump caused by irresponsible lending that can affect the US economy and a problem with a lack of confidence in the financial markets. It's bound to hurt the global economy. Unless there are significant measures that are put in place to address the specific problems, the fallout from all this can be long drawn. To make matters worse, low interest rates in the US means expensive imports, which probably means less spending by USD consumers AND not to forget higher inflation.
On a brighter note, the stock markets historically generally react well to interest rate cuts.
raincool2005
Senior Member
the Fed cut cannot save the subprime issue (money lost is a lot !) , it can only lessen the pain.
Come Nov/Dec will be very tense again
Come Nov/Dec will be very tense again
Bro, I guess that you have missed my points. I am not saying that recession in the US in not likely. What I am trying to put across is look out for more evidences to comfirm the signal.
Again, you listened to the media, such as Bernake's testimony, etc and assumed that recession is coming? Many retail investors panic sold their shares last month during the meltdown due to the surfacing of subprime problems. What happened today? These retail investors were 'suckers' (no offense) as they believed too much in media/news reporting, etc. Hence, they panic sold their shares.
I don't believe in too much in what analysts' statements. I am more interested to see real facts and data.
Going forward to 2008, many people failed or don't realise that some major events are taking place in the world. If you are a mid-term investor, you will buy in when the stock market take a slight cool off (technical correction) now, and prepare for next year bull run. Not unless that for the next 3 quarters, economics data show that US in slowing down, then perhaps the bull will not materialise. Till then, I am still positive about the stock market especially Asia and Japan.
reachme2003
Senior Member
anyone into futures trading?
raincool2005
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