The Week Just Gone

Another week and another plunge for equities, more fears about the intensity of the global recession and renewed scepticism over the troubled financial sector. Yet again, flight-to-safety trades such as the US dollar and government bonds took centre stage.

The FTSE 100 fell below 3500 on Friday, to the lowest level since March 2003 as investor pessimism intensified. The index has lost more than 20% since January. It closed the week at 3530.73, ended Friday’s session virtually unchanged and bringing the week’s overall decline to almost 8%.

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The Week Just Gone in Spread betting

It was another painful week for equity markets- the FTSE was down 1.5% on the week as Friday saw stocks slide and reverse a two day rally. The index was again hurt by US data (GDP data released on Friday revealed an annualised 6.2% contraction in the US economy, the weakest reading since the first quarter of 1982) and more concerns over banks. Although London has not yet broken its November lows, unlike other US and European indices. The leading Industry Sectors were Auto mobile and Real Estate up 11.4% and 9% respectively.

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Last week, world stock markets crumbled under the relentless barrage of bad news. Markets were left staring into the abyss as the global sell off continues. All eyes were on the wider S&P 500, which unlike the Dow Jones, managed to avoid breaching the lows of 2008. There is a huge fear that a technical breach of this level could result in a cascade of selling. After all, what is there left for world governments to do? They have already started printing money, and some like the UK government are taking on record levels of debt.

Investors were evidently purging any potential risk in their portfolio, and turning to the perceived safe haven of gold, which touched the underside of $1,000 on Friday.

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The week ahead.

After a terrible Tuesday, markets never really recovered last week. After rallying into Treasury Secretary Geithner’s speech on Tuesday, US markets unwound in spectacular fashion. It appears to have been a case of markets expecting clarity from the new US administration, and getting nothing of the sort. The Dow Jones touched its lowest levels since November 2008 at one point.

Whether it was a case of ‘sell the news’ or a technical sell off, there’s no getting away from the fact that yesterday’s fall will have left central bankers and government officials cursing.

The rule book is being re-written by the week, as officials try one solution after another. Much was made of Bernanke’s expertise on the Great Depression, and arguably his dramatic interventions have helped stave off a financial apocalypse. However, right now it’s a blank slate, the scary thing about the current crisis is that nobody really knows how bad it will get, and when it will turn around.

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The Week Just Gone

Scepticism was rife across the markets this week, stocks tumbled, dismissing global efforts to stimulate economic growth amid mounting evidence of a deepening recession. Equities fell sharply as investors flocked to the safety of government bonds, gold and the dollar. In the UK, Lloyd’s dragged the banking sector lower as its shares fell 32% on Friday. The FTSE closed the week at 4189.6, a loss of 102.3 points or 2.38% over 5 days.

FTSE Rolling Future Mon 9th to Fri 13th Feb 2009

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