You are required to produce a short report on the developments in the UK and International Financial Market during this week from the news as reported in the Financial Times – Assignment Example
Finance and Accounting Finance and Accounting The World Stock Markets during this week Shellock illuminates that the global stock markets has commenced the week on an encouraging manner since the equity bulls have not only shrugged off the dollar currency but also reduced the prices of oil. With the stimulus support emanating from China, the interest rate of the Federal Reserve of the US is anticipated to increase though gradually. There is so anxiety in the market due to the new development where Greece is seeking funding from international creditors. However, in US specifically New York, there was a 1.2% increase of S & P 500 to 2086. Previously, it had reduced by 2.3%. Moreover, stocks in the biotechnological sector are promising due to activities such as acquisition and merger. This month the US equity bar is reported to be below the high records it had realized last month.
The energy stocks have been influenced by the oil prices which are relatively weak. The Brent crude oil declined to 55.2 dollars per barrel though it settled at 56.29 dollars. In Europe, the index of the FTSE Eurofirst 300 increased by 1.2%. The sector that impacted heavily to these phenomena was the technology and car making industry. However, in Frankfurt, Xextra Dax increased 1.8%to the 12000 level. Nikkei 225 in Tokyo increased 7%. On the other hand, Shangai Composite increased 2.6%, the highest level for quite a long time.
Report released today indicates that approximately 250,000 jobs were created the previous month the unemployment rate steadily remained at 5.5%. The consumer spending in the Us increased by 0.1% compared to last month and the price index for individual expenditure on consumption increased by 0.2 putting an end to subsequent declines. The US high borrowing cost has helped the stability of the dollar currency against other currencies such as euro. The Treasury bond increased at 1.96%. The euro weakened by 0.7% at $1.0811 though this was relatively lower than the 1.05 in March. In addition, the decline of the single currency can be attributed to the anxiety in the market due to Greece’s situation. However, Europe has continued to grow.
Exchange rate and interest rates
Saelensminde (2015) provides and insight of the existing arguments by the Bank of England concerning the interest rates. There is conflict with some arguing that the rate will rise while economists vindicate that the rates have the potential of going down due to the Bank being compelled to lower the rate as a remedy to the deflation. This is because interest rates are vital to the performance of assets. Currently, the rates are below the zero percent mark (negative) for the increasing number of borrowers especially in the financial market (Walker, 2015). Economists illuminate that the rate should not go below zero and there is uncertainty that it could go below or above that mark. This phenomenon is attributed to policies of central banks in the Euro zone. For example, the commercial banks of Sweden, Denmark and Switzerland have negative interest rates where excess money is held in the commercial banks. Consequently, private banks have no option but to pay in order to park their money. The deflation has been characterized by lower energy prices and prices for alcohol, food and cigarettes though they have remained at the same level form last year. It is anticipated that the ECB is set to employ quantitative easing in an attempt to provide a remedy to the situation.
Despite the fact that the sterling pound being stronger than numerous currencies in the foreign exchange market, it recently declined to a low of 1.49 dollars. As of 23 April, the one British Pound Sterling (GBP) was an equivalent of 1.5173 dollars (Vassallo, 2015). However, its trading with other world major currencies are as listed below.
GBP to JPY
GBP to INR
GBP to CHF
GBP to AUD
GBP to EUR
GBP to CAD
The above figures illuminate that the sterling pound has been considerably stable in the foreign market. Furthermore, the graph above indicates the contemporary performance of the Sterling Pounds.
The major news and developments in the banking sector
One of the developments in the bank sector in the UK is that through the levy on the banks balance sheets and the European Union (EU) concerning payment some firms are likely to cripple. The top firms in the city are likely to be chase away. HSBC is also at the forefront of leading the closer of FTSE. HSBC is apparently moving to Hong Kong and its shares has been elevated or rather boosted since there is a possibility of evading the levy from the bank due to the move. This move has also been accelerated by changes in the regulations due to post crisis. In addition, the emerging news is that the stake of tax payers Lloyds Banking Group has decreased below 21%. This has raised concerns form several quarters (The Telegraph, 2015).
The impact on the current conditions is that the confidence of the investors is likely to go down (Vaitilingam, 2015). Consequently, the business environment may remain rigid as other companies and banks may follow suit by moving to other markets due to bank levies just as HSBC’ (The Telegraph, 2015).
The Telegraph (2015). Banks and Finance. Retrieved on 24 April 2015 from: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/
The Telegraph (2015). Currency and Exchange Rates. Retrieved on 24 April 2015 from: http://www.telegraph.co.uk/finance/currency/
Walker, A. (2015). Why use Negative Interest Rates. Retrieved on 24th April 2015 from: http://www.bbc.com/news/business-32284393
Vaitilingam, R. (2015). Financial Times Guide to Using the Financial Pages. Financial Times – Prentice Hall.
Vassallo, M (2015). Where Next for Sterling Exchange Rates. Retrieved on 24th April 2015 from: http://www.poundsterlingforecast.com/category/sterling-strength/
Shellock, D. (2015). Policy Hopes help lift Global Stock Market . Retrieved on 24th April 2015 from: http://www.ft.com/intl/cms/s/a4745abe-d689-11e4-a598-00144feab7de,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fa4745abe-d689-11e4-a598-00144feab7de.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=#axzz3YExQSDEf
Saelensminde, B (2015). The Bank of England is arguing about interest rates again. Retrieved on 24th April 2015 from: http://moneyweek.com/right-side-the-bank-of-england-is-arguing-about-interest-rates-again/