Toyota Motor Corp has forecasted their first ever annual operating loss in its 70 year history. The Japanese automotive company has also put out an 11 day output suspension that is unprecedented. Thousands of contract workers are being laid off raising unemployment and homeless levels, especially in the Nagoya region. The forecasted loss is largely due to the financial economic crisis, the US recession and the increasing value of the Yen vs US dollar.
The US has lost jobs for the fifth month in a row at 5.5 percent as the jobless rate spiked (increasing by 0.5%) as a consequence of a class of students graduating schools and moving into the workforce. This is the largest spike in teenage unemployment since 1948. The spike was larger than every forecast from a Bloomberg News survey of economists. Allen Sinai, chief economist at Decision Economics in New York, has said that "Most of the economy looks in recession.'' Also Ten-year Treasury yields dropped to 3.92% in New York, from 4.04% on Thursday.
It is a bear season in the stockmarket and gold miners are prospering. The possible US recession is the most probable main driver. Gold is seen as the best hedge against both the US recession and the US dollar currency weakness. Gold has returned a neat 20 percent return compared to the S&P which has declined 12 percent. Market commentators relate the current action in the market to what happened during 1979-80, when gold prices trebled within a matter of few weeks. A Fed Reserve rate cut would surely propel gold to new high price levels.
Gold and platinum prices have surged following mine closures in South Africa, a leading producer of the metals. South Africa is second to China in Global gold production and is the top producer for platinum. AngloGold, Harmony and Gold Fields suspended all their mining operations following a national electricity emergency. Mining operations suspensions follow fears of power interruptions would trap miners underground. Mine equipment problems, accidents and maintenance have contributed to a decline in production.
Watching and waiting. But while waiting I've taken advantage of this recent volatility to make some profits. The recent volatility in stock prices and foreign exchange rates worldwide is simply waiting for one number. The US interest rates. Currently the interest rate stands at 5 per cent. The Federal Open Market Committee (FOMC) from the Federal Reserve in the USA will determine whether or not to raise rates at their two-day meeting, ending June 29.
China hiked up their benchmark interest rates to 5.85 per cent last week, to rein in growth and inflation. Foreign Banks applauded Chinese interest rate hike as emblematic of China’s broader effort to allow market forces to play a larger role in the economy. However there is still that Chinese RMB to US dollar peg that severely constrains their ability do conduct monetary policy. The Chinese may need to release the US dollar peg, allowing the Yuan to appreciate at a faster pace to prevent an influx of speculative capital.
Soaring oil prices over the past few weeks are set to escalte Australian Petrol Prices, set to hit $1.50 in the next few months
The IMF or International Monetary Fund has revised up their forecasts for world economic output despite record oil prices and natural disasters - the best groth in three decades. Global economy expected to achieve a growth rate of 4.9%, 0.6% higher than previous growth estimates. Predictions for the global growth in 2007 was also boosted to 4.7%, higer by 0.3%. Australia's economy is pegged to grow 2.9% in 2006 and 3.2% in 2007. This World Economic Outlook is releases twice a year in Washington.
Investment funds are driving the increased demand for precious metals. These price levels haven't been reached in two decades for both gols and silver prices. Higher price levels for gold and silver were driven by turmoil in the Middle East, rising oil prices and a weakening US dollar. The active June contract for gold peaked at $US623 an ounce on Tuesday 18th April 2006. Gold futures haven't seen this since 1980. for silver, May silver, the most active silver contract, hit a high of $US13.68 an ounce, a price not seen since 1983.
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Top 150 Public Companies Listed on the Australian Stockmarket as at 29/05/2009
- BHP Billiton
- Westpac Banking Corporation (WBC)
- Commonwealth Bank of Australia (CBA)
- National Australia Bank (NAB)
- Telstra (TLS)
- News Corporation (NWS)
- Woolworths Limited(WOW)
- Woodside Petroleum Limited (WPL)
- Rio Tinto
- Westfield Group (WDC)
- Westfarmers Limited (WES)
- QBE Insurance
- Newcrest Mining Limited (NCM)
- Origin Energy Limited (ORG)
- Santos Limited (STO)
- AMP Limited (AMP)
- Macquarie Group (MQG)
- Foster’s Group Limited (FGL)