Major Market Movers: Deepening Recession

Daily Forex Fundamentals | Written by Crown Forex | Mar 12 09 08:10 GMT |

JPMorgan Chase joined Citigroup in announcing that the first two months of this year were profitable and this indeed helped U.S. Equity indices to extend their gains however the ongoing signals which continue to highlight that global growth is falling deeper in recession started to weigh down on stocks this morning and accordingly investors preserved their bearish outlook for global economies. Japan released earlier today their final GDP estimate for fourth quarter, where the world's second largest economy contracted by 3.2 percent following the prior estimate of 3.3 percent and above median estimates of 3.5 percent contraction. The Japanese economy however contracted over an annualized rate of 12.1 percent which was revised from the prior contraction of 12.7 percent, yet still it marked the largest contraction since 1974, the estimate was also better than median estimates of a 13.4 percent annualized contraction. The Swiss National Bank will announce today its interest rate decision, in which the SNB is expected to cut its benchmark interest rates by another 25 basis points to 0.25 percent, the deepening recession amid the worst financial crisis since the Great Depression continues to weigh down on economies all around the globe. Meanwhile the European Central Bank will release its March monthly report, however the ECB is not expected to reveal anything new, as economic conditions continue to worsen amid the ongoing financial crisis, while the euro zone major economies continue to fall deeper in recession especially as global demand is faltering. The euro zone will also release their producer price index for the month of January, PPI is expected to drop 0.2 percent following the prior drop of 1.3 percent reported back in December, while PPI is expected to rise by an annualized 0.5 percent down from the prior rise of 1.8 percent. The euro zone largest economy continues to feel the heat from the financial crisis as the German economy continues to fall deeper in recession, as slowing domestic spending in addition to slowing global demand continue to weigh down on Europe's largest economy. Germany will release today their industrial production index for the month of January, production is expected to have dropped by 3.0 percent following the prior drop of 4.6 percent reported back in December, while industrial production is expected to have dropped by an annualized 15.5 percent following the prior drop of 12.0 percent. The euro zone economy remains under huge pressures as its largest economies continue to suffer the aftermath of the worst financial crisis since the Great Depression, while the ECB was rather rigid compared to other central banks around the globe, especially in regard to monetary policy and specifically interest rates. The ECB was much less aggressive as it remained cautious when it came down to interest rates, however the ECB might find themselves forced to follow the lead of other central banks and we could eventually see interest rates falling in the euro zone down near zero. Moving on across the Ocean, the United States continues to fall deeper in recession amid the worst financial crisis since the Great Depression, however optimism started to emerge over the outlook for the banking sector, after JPMorgan followed the lead of Citigroup in announcing that the first two months of this year were profitable. If banks were able to find their way back to profitability after almost a year and a half of losses and write-downs, which exceeded $1 trillion so far around the world, global economies and specifically the U.S. economy might be able to start recovering, however it's still too soon to judge that the banking sector is on its way to recovery and accordingly it's still too soon to believe a recovery is soon, though this might lead to some sort of stability in financial markets, which could pave the way for the world's largest economy to start growing again. The U.S. will release today their retail sales index for the month of February, retail sales are expected to have dropped by 0.5 percent following the prior rise of 1.0 percent reported back in January, which was supported by the post holiday discount season which lured consumers into seeking bargains. Retail sales that exclude autos are expected to have dropped by 0.1 percent in February after rising by 0.9 percent back in January, affected mainly by tightened credit conditions in addition to rising unemployment and falling home values. The weekly jobless claims are expected to continue showing that the labor market is still suffering from deep weakness, initial jobless claims are expected to rise to 644,000 from the prior estimate of 639,000, while continuing claims are expected to ruse to 5.140 million from the prior estimate of 5.106 million. The labor market continues to weaken as companies continue to lay off workers amid the worst economic conditions since early 1930s, as the unemployment rate surged in February to 8.1 percent which marked the highest in almost 25 years, while companies continued to increase the pace of layoffs in a bid to cut some costs. Finally, the U.S. will release their business inventories for the month of January, the index is expected to drop by 1.0 percent after falling by 1.3 percent in the prior month, while the report should also continue to signal falling sales, as the inventory to sales ratio continues to surge, and that means spare capacity remains high and that further falls in production will follow, which all leads to one conclusion that the recession will continue to deeper for a while… Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.