It was a better week for world stock markets last week, with all the major indices pushing further off the January lows.

Despite Friday’s US payrolls falling by a more than expected 598,000, stock markets powered higher. This was an extremely weak employment report, with 3.5 million fewer Americans employed In January than a year earlier. However, the world’s biggest economy isn’t willing to roll over and die just yet. The rate of decline is accelerating, but US unemployment is still below the peaks of the 1980s and 1970s. Stock markets moved higher on the hope that Friday’s dire figures will act as a catalyst for the massive Obama stimulus package.

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The Bank of England this week made a 50 basis point cut, putting interest rates at an historic low of 1%. As expected the European Central Bank held rates at 2%.

On Firday US Non-farm payrolls for January showed a loss of 598 000 jobs- the biggest drop since December 1974. Unemployment is now at 7.6% in the US, the highest level in 16 years.

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The FTSE ended the week with a gain of 2.4% to close at 4149.5, the intraday high for the week was 4317.6 and the low 3956.7. The Banks led the gains, the industry index showed an increase of 18% for the banking sector last week, whilst the Leisure Goods industry lost 13%.

All US indices were down slightly in the fourth consecutive week of declines.  The Dow fell 76.70 points, or 0.95%, to close the week at 8000.86. The S&P lost 6.07 points, or 0.73%, to 825.88. The NASDAQ was flat, down just 0.87 points to 1476.42.  Things were even worse for small cap stocks with the Russell 2000 losing 11.20%. January has proven to be a tough month for the S&P and Dow, which both fell about 9% the largest January sell-off ever for both indexes. The Nasdaq fell about 6% in January.

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Volatility has been more the rule than the exception in recent trading as last week proved to be another turbulent week for the world’s markets. Friday’s figures brought the widely anticipated confirmation that the UK is officially in a recession. The Office for National Statistics revealed that the UK’s economy shrank by 1.5% in the final three months of 2008. The figures showed that the plunge was sharper than forecast, sparking fears of a deep and prolonged recession.

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With the credit crunch hitting hard its difficult to find anything investing in.  Even if you did find something paying well, the sliding value of the pound means that you are losing out because of the value of Sterling. You can hedge against this by betting on the value of the pound, Euro or Dollar. You can do this on the Forex.

Unlike other financial markets the forex market literally cannot crash. This is due to the fact that in the forex market one invests in a currency’s value relatively to another currency. One is always buying and selling at the same time. Therefore one can profit when one currency weakens against another just as much as if it were strengthening against the same currency. In fact, the instability that the global crisis has introduced into the market is considered by many to be a positive thing. Volatility in the forex market, despite perhaps making it more risky, also provides greater opportunities for profit. The sharper the swings the currencies go through against each other, the more forex traders stand to profit.

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