Good Afternoon ,
Normal service resumes markets after the recent rally which had almost gotten everyone excited that the end of the near market maybe in sight. The strength of the rally over the last few days has seen prices push ahead and through the chart resistance levels and now we are seing a pull back which in an ideal world will see these levels become supports.
The market was driven on a wave of enthusiasm after the Geithner plan was fleshed out. This week we have the G20 Summit to look forward to and await to see if any signs of coordinated action can be agreed which will lend further weight to the optimists camp.
Wall street was reeling his afternoon after the news that the US had rejected the request of GM and Chrysler for further Bailout money. The new US administration told the carmakers to come up with new plans or risk insolvency. GM has received $13.4bn in government aid and had asked for an additional $16.6bn. Chrysler has received $4bn and had asked for another $5bn. But both companies failed to meet targets on cutting their debt and reducing the cost of benefits paid to workers.
A draft of the G-20 communique was leaked over the weekend. It has not been received very positively. It was described as having no real substance on most of the big issues - as predicted and the language on monetary policy and fiscal policy is completely vacuous suggesting the Europeans won big and the U.S. lost on these issues), and the “regulatory reform” initiative amounts to building more ornate structures
Spain nationalised Bank Caja Castilla-La Mancha after arrangements to have it taken over or merged failed. The Bank of Spain appointed administrators to run the savings bank and removing its management. THe Spanish Government pledged to guarantee as much as 9 billion euros ($12 billion) of the lender’s liabilities.
Spain like Ireland is in the midst of a banking crisis based after its own property bubble burst. Loan defaults in Spain have tripled since 2007, and unemployment is now 14 %,the highest in the European Union. The government is forecasting a contraction of 1.6 percent this year which is still a long way ahead better than the forecasts in Ireland where we are looking at a 7% to 8% (Read 10%+ contraction) this year.
The Financials really gave up the ghost today with AIB -14% , BOI down a mere -9% and Irish Life -10% , the UK banks were all down sharply too with RBS -12.5% and Lloyds -15%.
The Building materials stocks got walloped also with CRH -3.2% ,Grafton -3.5% and Kingspan -1.9%.
Elan continued to drift as the rumoured bid by lundbeck failed to materialise (again)…
The resignation of John Holberry from C&C had little impact on the price thought the statement was honest saying that the arrival of the new management team had dented Mr Holberrys hopes of progression at C&C.
Smurfit dropped -6%,Independent News and Media fell -6%
Aer Lingus remained grounded and Ryanair continued to struggle with a continuous flow of stock for sale.
Paddy Power also fell -3.5% hit as much by the market as the read across from 888 holdings results. 888 said that the broader economic climate remains challenging and overall revenue in Q1 is expected to be slightly lower than Q4, which was a slightly longer quarter. Poker and Emerging grew quarter on quarter and new customer levels were considerably better than expected, while Casino trading was challenging.
Overall a quiet and weak start to the week , Ireland closed down -1.9% , European markets closed down -3.8% , while London fell also -3.5% and Wall Street is down -3.6% at 5pm.
Have a good evening.
Lets hope this is just a pull back rather than the end of the mini rally.
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
www.merrion-capital.com
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