Week ended 20 Sept 2008 – Financial Markets in Turmoil!

Posted by admin on 20 September, 2008 under Weekly business news summary | Be the First to Comment

This week has seen the biggest movements ever on the FTSE 100 – when at the end of the week the index jumped 8.8% on news of the US government has pledged to bail out the troubled US banking system!

The FTSE has been on a roller coaster starting the week at 5,417 and dropping to 4,880 during the week to jump 431 on friday to end slightly lower thatn the beginning of the week at 5311! Earlier in the week the Glbal Central banks pumped $180bn into the markets to lift the amount of funds available to the world banks. On Friday the US Treasury is proposing to buy back up to $800bn of the bad debt in the US mortgage market, as the US debt plan takes shape.

It will be interesting to see what happens in the mortgage markets over the coming months where we have seen a 36% slump in mortgage lending in August this year over August of 2007, once the above measures start to kick in. The lending market has stalled because banks are reluctant to lend to each other and the inter-bank lending rates are at a high – I was speaking to my friend in Australia and he commented that “getting a mortgage in Australia at the moment is like winning the lottery!”

The core assets and business of Lehman Brothers is to be purchased by Barclays Bank for $1.3bn, which incredibly includes Leham’s Manhatten Skyscraper worth on its own around $1bn! So in a market of turmoil the vultures circle and there are bargains to be had. Judge approves Lehman deal.

As with last week the travel industry has seen trouble with Italian airline Alitalia being on the edge of going into liquidation. What seems crazy is that there have been two rescue packages open to the company, which have been turned down by the unions to block redundancies. So the unions would rather sit there and block a rescue where a few jobs are lost in preference to the whole company going under where everyone losses their job! CAI consortium was only approved by 3 out of the 9 unions to block 3000 job losses!

On the bright side is that the petrol retailers have are reducing fuel at the pumps in the UK on the bakc of dropping oil prices. BP and supermarkets Asda and Morrison were leaders in cutting prices.

End of the week saw:
Stock exchanges:
FTSE 100: 5,311
DOW: 11,388
S&P: 1,255
Nikkei: 11,921

Currencies
UK Sterling £ to US Dollar $ 1.83070
UK Sterling £ to Euro € 1.26995
US Dollar $ to Euro € 0.69370