Inflation up, housing down
February 28, 2005
The US Commerce Department has reported a strong increase of 0.3% in inflation, furthering speculation that quarter-percentile rises are to be expected in the coming months.
Although spending and income figures were in line with analyst predictions, a particular surprise was a downturn in the overall US housingmarket of almost 10%. This was against an expected rise of around 2.5%.
While there is no immediacy for corrective action as yet in the market data, and no rush for increasing lending rates, the fall in housing market has some observers concerned.
The property market has been a particular vehicle for economic growth over the past few years, and signs of declining property values could be indicative of declining economic strength.
Bank of Korea hints then denies of dollar sell-off
February 23, 2005
News that the Bank of Korea might start to sell off its dollar reserves led to US dollar experiencing its biggest fall in 4 months, while traders worried at fears of a general sell-off of dollar reserves across Asia.
The world’s largest holders of US dollar reserves are Japan, China, Taiwan, and South Korea respectively, and with moves by OPEC nations to diversify especially into euros, a report for the South Korean parliament suggesting a move into Canadian and Australian dollars was interpreted as a move away from US dollar holdings.
South Korea was later keen to assure markets that it was not planning on selling its dollar reserves, leading to relieved speculators rallying to the dollar again.
Talk fails dollar strength
February 17, 2005
The US dollar slipped again after briefly rallying after Alan Greenspan’s semi-annual testimony to the Senate banking committee.
While there remained hints of action, there was little to satisfy the markets that any firm controls would be put in place to help the dollar gain strength in the currency markets.
Greenspan ups a quarter percentile
February 3, 2005
Alan Greenspan finally allowed the markets to exhale, as the Federal Reserve finally upped interest rates again, by a 0.25%.
The move had been long expected, and as reports came in over December and Jabuary suggesting strong economic growth, the move was inevitable.
Corporate giants report good on Q4 earnings.
February 2, 2005
US markets warmed to strong profit results from billion dollar companies today.
Boeing reported net profits of $186m - down 84% on last year - namely due to closure of its 717 programme. However, this was still above narket expectations. Strong defence contracts helped buoy performance, and the coming Boeing 7E7 Dreamliner gives 2005 a very positive outlook for the company.
News Corp, Rupert Murdoch’s media company, reported an 80% increase in Q4 profits to $386m (£205m). Film and DVD sales suprised analysts by prociing an engine to above-expectation profits - and are expected to provide further growth in 2005.
Google reported Q4 profits of over $204.1m , which again exceeded market expectations, resulting in a stock price’s rise that at one point peaked over 7% in value at $216.80 per share.
Amazon was the only large trader to disappoint. Although a tax credit swelled their Q4 earnings to $346.7m, the site of overall revenues climbing but with little return on net profits left shareholders feeling shunned in lieu of consumers, and devalued the company by over 13%.