Tuesday, June 28, 2011

Fisher Capital Management- Financial Market August 2010

Fisher Capital Management- Financial Markets: Sentiment in the financial markets has improved
over the past month. The global economic recovery is continuing,
so far there have been no sovereign debt defaults, and there has
been a modest recovery in the euro. Investors and traders therefore
appear to have concluded that the gloom was overdone.

But there has been evidence of a worsening situation in Spain, and
the decision by the Chinese authorities to adopt a “more flexible”
towards renminbi has also raised some concerns about the growth
prospects for the Chinese economy.

Fisher Capital Management- Equity Markets: All the major equity markets, and the emerging
markets, have improved over the past month. Wall Street has outperformed
markets elsewhere because of some welcome economic
data; there have been strong gains in most of the mainland European
markets as the sovereign debt crisis has appeared to ease; the UK
market has welcomed the measures by the new coalition government
to address the problems of the huge UK fiscal deficit; and the
Japanese market has also moved slightly higher. Corporate results
have been satisfactory; and this has helped to improve sentiment
amongst investors.

Government Bond Markets have had another unusual month. The
sovereign debt crisis might have been expected to lead to a general
weakness in bond markets; but the main effect has been to produce
aggressive switching for the “weaker” markets to the “stronger”
ones, and a further widening of the yield curve.

As a result the major markets are unchanged or only slightly lower
at a time when the “weaker” markets, especially in Southern Europe,
have continued their sharp declines. Slow economic growth and
low short-term interest rates are continuing to provide support.
Currencies: The improvement in sentiment in the markets has led
to a movement of funds out of the “safe havens” of the dollar and
the yen into commodity-related currencies and “riskier” assets.
Both the dollar and the yen are therefore slightly weaker over the
month; and this movement has also eased some of the pressure on
the euro, and allowed it to recover.

Sterling has also improved as the markets have welcomed the
measures introduced by the new UK government to reduce the
fiscal deficit.

Fisher Capital Management- Shrt-Term Interest Rates: There have been no changes in shortterm
interest rates over the past month in the major financial
markets.

Fisher Capital Management- Commodity markets: have produced a mixed performance over the
past month, with some weakness in base metal prices, but strong
gains in the prices of cocoa, coffee, oil and precious metals.

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