Weekly market review around the world: 5 – 9 May 14/05/2008 00:00

The week saw oil prices reaching a record high and global equity markets consolidating after recent recovery.

5 – 9 May

US
The US Securities Exchange Commission called for more transparent disclosure from investment banks and securities companies, with the news prompting a sell off on Wall Street. Financial stocks also fell after US insurer AIG revealed heavy credit-related write-downs. Overall the S&P 500 fell by 1.8 percent and the NASDAQ by 1.3 percent over the week.

Japan
Markets also fell over the week, with the Topix index closing down 2.6 percent. Financials were hit hardest, partly driven from the announcements in the US.

Europe
A rise in Spanish unemployment, a further fall in eurozone retail spending, and news of a drop in German new orders highlighted the difficult period the European economy is going through. Subsequently, the German DAX finished the week down 0.6 percent.

UK
Financial stocks suffered following the announcement from AIG, nevertheless, the FTSE All-Share remained flat for the week.

Asia
Hong Kong’s Hang Seng fell by 4.5 percent, while the Hong Kong China Enterprises index of Chinese stocks, listed in Hong Kong, declined 6.6 percent, as markets reacted to the news from the US.

Latin America
Conversely, Latin American equities had a broadly positive week, with markets finishing higher.  Early in the week Brazil’s Bovespa index rallied 1.2 percent to close above 70,000 points for the first time. The move followed last week’s upgrade of its sovereign credit rating to investment grade by Standard & Poor’s.

Currencies
After recent rises, the dollar ended the week slightly weaker versus the euro. However, the US currency remained stronger against most rivals. The biggest move came from the Japanese yen, which was sought as a safe haven from the increased volatility. Sterling, meanwhile, was undermined by expectations of a 0.25 percent interest rate cut in June, after there was no change last week.

Commodities
Oil was the main mover in the commodity markets, hitting a record high of USD 126.20 a barrel. This was after OPEC, the producer cartel, reiterated its belief that the global market was well supplied. Meanwhile, the price of gold bullion rose 2.5 percent over the week, finishing at USD 876 an ounce.

This commentary was compiled with the assistance of BlackRock, one of the world’s leading investment management groups. For further information, or to discuss how current global economic conditions are affecting your investments, please feel free to contact Craig Welsh at Spectrum IFA Group or visit www.expatfinance.nl.