Ftse performance reveals a UK recession is imminent
The FTSE performance reports show the trend in the European and US economy. The poor state could be a derivative of external shocks
FTSE performance actually includes reinvested income and or dividends so it really does not show the real global interest in the London Stock Exchange as the FTSE cannot actually track new investors. So there really is no way of assessing new investor confidence as an extension of performance. It is true that FTSE performance really depends on the carbon reliant industries is a fact that investors, and firms must realize. However FTSE performance has been good in the last 6 years. Government bond yields though have been better at determining FTSE performance over the past decade rather than forecasts for earnings.
Examining the Dow Jones Industrial Average and FTSE performance this year compared to JSE and the fact is that this investment bubble will burst shortly. Averages for the FTSE performance are specifically designed to protect investments from high FTSE fixing at the beginning of the account or low FTSE fixing at the annual maturity of the account. This definitely contributed to the poor FTSE performance. Tables are affected by the FTSE NASDAQ as all the technology sectors are lifted from NASDAQ’s stock market strength. It is important to state that the top end of the index might see great returns, such as the FTSE 100. We will examine the FTSE performance for each month as the results are released. Here is the performance for February 2008.
February 2008 FTSE performance
As Global equities are seriously affected by concerns about recession and constant weak economic data that comes from the US economy. The disappointing economic data from the USA coupled with existing credit spreads at elevated and increasing levels along with the pessimism on the US economy has led to an inevitable recession. In February 2008 USA consumer confidence fell to its lowest in sixteen years and this was exacerbated by an increase in inflation and jobless claims numbers. The ISM Non-Manufacturing index fell from 54.4 to 41.9 in the previous month the largest decrease in history. Ben Bernanke FED chairman delivered a pessimistic testimony on the US economy to Congress and disclosed that there would be inevitable bank failures and made it clear that investor should begin to increase capital. Bernanke indicated that the central bank was willing to loosen monetary policy and took care to highlight downside risks to economic growth indicated the FED was prepared to take action in response to any economic shocks.
The FTSE Global All Cap Index returned 0.3% in February 2008. Despite healthy European economic data, notably an above forecast survey of the Euro zone service sector and a truly unforeseen rebound in British retail sales, dampened expectations that the ECB and BoE would follow aggressive monetary easing. As anticipated, the ECB paused on Euro Zone interest rate holding at 4%. Trichet the European Central Bank president, stated preemptively increasing interest rates to in an attempt to restrain inflation posed substantial risk to economic growth. The BoE however reduced UK benchmark interest rates by 25basis points to 5.25%.
The FTSE Developed Europe All Cap Index rose 1.9%. Gains were substantially larger in Asian markets with the FTSE Asia Pacific ex Japan All Cap Index rising due to strong Japanese fourth quarter growth, however consumption levels will have a negative impact on 1st quarter results for 2008. The FTSE Japan All Cap Index rose. It is excellent that commodity markets recorded highs due to energy, agriculture, precious metals and base metals sectors and markets. Crude spot price closed the month ended February 2008 on a high of USD100.8, up a whopping ten percent month over month. Oil prices continued to skyrocket and were buoyed by a reduction in supply as a result of disruptions in Nigerian and Ecuador oil. The currency markets were in a tail spin as the Euro Dollar hit another all time high against the USD again closing the month at USD$1.52 up by 2.5%. The move was worsened because of the ECB’s unlikeliest to cut rates in the short term coupled with inflation affecting the US economy. The USD was also battered to a three year low against the Japanese Yen closing down by 2.1%.
Conclusion on the FTSE.
Investor’s attitudes and predictions of FTSE performance is based on investment trends and topical issues. Despite the pessimistic outlook of the European economy on a whole the market is not about to plummet. Many investors are aware that the mining stocks have been seeing steady growth over the last few years and that has added to the rise in the market, this has led to analysts calling these share ‘must buy’ shares. If there is usually strong FTSE performance it is undermined by a weakening investor sentiment.[tags]ftse performance,FTSE performance reports,Global markets,Indices,FTSE 100,FTSE 250,Small Cap[/tags]
