Shaw Capital Management News: Shaw Capital Management Korea: Financial Markets | Shaw Capital Management News

http://shawcapitalmanagement-news.com/2011/08/04/shaw-capital-management-news-shaw-capital-management-korea-financial-markets/

For most of the past month sentiment in the financialmarkets continued to improve.
There was further evidence that the global economicrecovery was still on track, and short-term interestrates remained very low.
But towards month-end the mood changed after thedecision to downgrade Greek debt to “junk” status, andto reduce the credit ratings of both Portugal and Spain.There was a fear that the contagion would spread stillfurther, and that the bond market pressures resultingfrom the massive fiscal deficits around the world wouldhave serious financial consequences.There was always the risk that some of the measuresthat were introduced to counter the recession mighthave adverse consequences, and this is now provingto be the case.
Shaw Capital Management Korea: Major Equity MarketsAfter moving ahead for most of the month, most of themajor equity markets are ending the period unchangedor slightly higher, and there have been sharp falls inmany of the minor markets.
Wall Street has been the exception, and is endinghigher, encouraged by some favourable corporateresults.
But markets in Europe, including the UK, are lower,and there have been falls in the Chinese market, andother Asian markets, after the measures by theauthorities to reduce the risk of over-heating in theChinese economy.
However views about longer-term prospect are stillfairly positive, and the markets seem to be simplypausing until some of the uncertainties have beenresolved.
Bond markets; have produced a mixed performance,with the major markets holdings fairly steady, despitethe worsening background situation, but with the minormarkets, especially in Europe, suffering very sharpfalls, and yield spreads between the stronger and weakermarkets opening up to record levels.
The threat of sovereign debt defaults has increasedand urgent action is needed, especially in Europe, ifthey are to be avoided.However there are also warnings that similar conditionscould develop in the UK and in Japan if there are noearly moves to reduce the level of fiscal deficits.It is still expected that an aid package will be agreedto avoid a default on Greek debt; but this may onlyprovide temporary relief.
Shaw Capital Management Korea: Currencies
Movements amongst the major currencies have beenrelatively small over the past month.However the weakness of the euro has enabled boththe dollar and sterling to improve as investors haverushed to reduce their exposure to the Europeancurrency.
There is a fear that the debt problems affecting Greeceand other countries in the euro-zone will make itextremely difficult to restore the credibility of the euro,and that it might make it necessary for some countriesto leave the single currency system, at least on atemporary basis.
Shaw Capital Management Korea: Short-Term Interest Rates
There have been no changes in short-term interestrates in the major financial centres over the month.The Bank of Canada though has indicated that it isconsidering pushing rates higher, and this hasencouraged speculation that other central banks maybe planning similar moves.
Shaw Capital Management Korea: Commodity Markets
Moved higher over the past month as sentiment in thefinancial markets improved.