Dear Gilles In the financial world, this week - * It has been a quieter week as markets consolidated recent gains and some investors locked in profits * Most stock markets finished at lower levels, except for China which is recovering after the recent correction there * The International Monetary Fund has increased its forecast for global economic growth to 2.9 percent for next year from the earlier forecast of 2.5 percent. It has lowered its estimate of world economic contractionfrom 1.4 percent to 1.3 percent for this year * Finance Ministers from the Group of 20 industrialised nations are meetingin London to plan how to wind down the substantial economic support they have put in to ending the recession, but that support will clearly be sustained for some time to come In the US - * The Federal Reserve has confirmed it expects expansion in the economy in this Quarter, but remains concerned about employment levels * It is preparing to end the purchase of mortgage related debt, and anticipates very low interest rates for the foreseeable future * The US dollar has weakened against most major currencies as investorsmove back to stock markets in anticipation of solid economic recovery * The number of job losses fell to 216,000 in August, the lowest for a year. It was 276,000 in July and peaked in January at 741,000 * However, the level of employment rose to 6.9 million or 9.7 percent, a26 year record. While recovery from the recession is clearly in place, itwill be restrained by high levels of unemployment * The Institute of Supply Management's Factory Index increased to 52.9 in August, indicating an expanding economy for the first time in 19 months.It is up from 48.9 in July, the biggest two monthly gain since 1983 * The increase was lead by a jump in new orders which increased to 64.9,its highest level since December 2004* Confirmed purchases of existing homes rose 3.2 percent in July, a record sixth consecutive month of growth * Wells Fargo says it will repay the US government support it received without raising equity to protect share holder value * The number of US Bank failures rose this week to 89 and the Federal Deposit Insurance Corporation says 416 Banks are on its watch list as they have inadequate levels of liquidity * Ford, Toyota and Honda report car sales for this August were aboveAugust of last year, the first monthly improvement for two years due to the
government car purchase support scheme In the stock markets, trading volumes were low in the run up to Labour Day on Monday, and markets finished at lower levels for the week, for just the second time in 8 weeks. The S&P 500 finished down 1.3 percent at 1,016;the Dow Jones is down 1.1 percent at 9,441 and the NASDAQ is down by 0.4percent at 2,019. The European Central Bank kept interest rates unchanged at 1.0 percent on Wednesday in anticipation of the economic recovery. The Dow JonesEurostoxx 600 fell 1.3 percent to 233 and the Euro is just unchanged at US$ 1.4296. The German DAX closed down 2.4 percent at 5,384. The French CAC 40 closed down by 2.5 percent at 3,599. The Organisation for Economic Cooperation and Development now says the UK will be one of the last European countries to come out of recession andthe FTSE closed at 4,852, down 1.2 percent. The sterling pound is at US$1.6392. In Asia, the MSCI Asia index closed unchanged at 101. There has been a changed in government in Japan as the Democratic Party of Japan was elected with a substantial majority, replacing the previous government which had ruled for more or less 50 years. The Nikkei closed lower by 3.3 percent at 10,187 and there are 93.01 yen to the dollar. In China, the Purchasing Manager's Index rose to 54.0 in August from 53.3in July, the biggest increase in 16 months, confirming estimates of a growthin Gross Domestic Product of at least 8.0 percent this year. Vehicle sales in China may rise 28 percent this year, enough to make it the world's biggest car market. The CSI 300 finished the week up 1.0 percent at 3,077 and the Hang Seng closed higher by 1.1 percent at 20,319. In India, Gross Domestic Product grew 6.1 percent last Quarter from a year earlier after a 5.8 percent rise in the previous Quarter, but weak monsoon rains continue to complicate the economic situation. The SenSex closeddown 1.5 percent at 15,689. In Mexico - * The Finance Ministry will present its 2010 budget proposal on Tuesday.It is expected include increases in taxes, spending cuts and a bigger budget deficit as the country faces a US$ 22 billion shortfall caused by the recession * The peso gained yesterday on expectation the proposed budget will be receive support from opposition parties * The President has called for a reform of the country's finances and a rationalisation of state energy monopolies saying time and resources are running out and the needs of the people are increasing * The Central Bank now says it will continue its daily auction of USD $ 50 million to support the peso through the month of September. The Bank had previously said it would end the daily sales of dollars on 8th September * The Bank also said that if necessary it would auction up to US$ 250 million a day at 2 percent above the previous day's fix rate to provide liquidity for the market * The Central Bank now expects to accumulate an additional US$ 1.6 billion in net reserves by the end of the year, an increase of US$ 428 millionfrom its previous estimate The Bolsa is down 1.0 percent at 28,309 and the peso closed at 13.36 tothe dollar. The Brazilian Bovespa closed almost unchanged at 56,652 down 1.8 percent. In the commodities markets - * Crude oil closed at US$ 68.02 per barrel, down 6.6 percent in the week. OPEC is expected to leave oil production volumes unchanged when it meetson 9th September in Vienna and fluctuations in oil prices this week havebeen largely related to the weakness of the dollar * Gold prices closed at US$ 997 per ounce having traded at up to US$999.50, a 6 month high, as investors move out of dollars. Some analysts now expect gold to trade consistently above US$ 1000 per ounce * Silver prices were also boosted by the weakening dollar, and closed up10 percent at US$ 16.29 an ounce, its highest level for 13 months * Corn prices were down 7.0 percent at US$ 3.06 per bushel * Coffee futures are up by 1.6 percent at US$ 1.24 per pound * Sugar prices fell for the first time in 9 weeks to close at 21.60 cents per pound, down 8.2 percent * Copper prices fell 3.2 percent to close at US$ 2.87 per pound With regards Mark 04455 2861 8722
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