World stock markets rally on news from world goverments support for the banks

Posted by admin on 15 October, 2008 under Business news | Be the First to Comment

The world stock markets have rallied at the beginning of the week from a low on Friday 10 October 2008. The FTSE 100 had a low of 3,932 rising to 4,394,but since then has fallen back by 122 points as investors fear that the action from the worlds governments to strengthen the financial system will not prevent a worldwide recession.

Asian governments are the latest to action bank support

Both Europe and US have announced a series of steps to secure their banks to bring back confidence to the banking section by recapitalise banks and by providing bank lending guarantees to get credit markets moving again and the Asian Governments have now followed suit. Worldwide governments have now pledged around $3 trillion as part of efforts to stem the financial crisis facing the world, which is seen as the worst since the 1930′s depression.

Despite the UK running head-long into a recession by December 2008 consumer price inflation has soared to 5.2% in September 2008, which is up from 4.7% in August as the annual rate of inflation for energy and other household bills reached 15%.

The UK’s Retail Prices Index has come in at 5%, which is the figure used to work out pensions and benefits for the coming year.

There are signs however, that inflation is slowing, as oil prices have dropped to around $78 a barrel and food prices are showing signs of reduction and other commodity prices are falling. For example, coffee prices are tumbling due to the credit crunch which is prompting some exporting countries to stockpile the beans in an attempt to push prices higher. Indonesia is the world’s largest coffee producer and on Tuesday they threatened to halt shipments until prices recover and that they were to seek government help to address the crisis.