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One of the prime agendas at the upcoming G-20 summit at London next month is the coordination of the worldwide efforts in reviving the world economy.
US President Barack Obama is seeking to coordinate efforts his country is undertaking to deal with the economic crisis with that of most other countries worldwide. Talks on his subject had been going on for quite some time now already. India's Prime Minister Manmohan Singh will also be attending the summit.The GDP or the gross domestic product, one of the chief indicators of a country’s economic growth, has taken a downturn in many countries globally.
Asian countries including China and Japan have already introduced massive stimulus packages to increase consumer spending. President Obama is looking to match the simultaneous efforts his country and the countries overseas are making to cope with the economic crisis.According to the IMF, we could expect a world recession in decades.
The world economy is likely to shrink for the first time in decades this year. According to the IMF, the prediction can only be gloomier.
The head of the IMF Dominique Strauss-Kahn, speaking at a conference in Tanzania said that trade was falling at an alarming rate and business and consumer confidence had collapsed.
Africa is already reeling under global negative growth. Decrease in worldwide demand has undermined demand for many industrial commodities, which are important exports for several African countries. Exports including oil in Nigeria, Angola and Equatorial Guinea, and copper in Zambia form a substantial part of the Continent's revenue.
Sub-ZeroGrowth For the first in most of our lifetimes we can expect the global growth rate to fall under the zero The outlook from the World Bank is no less pessimistic. As IMF's sister institution, the WB also expects the global economy to shrink for the first time in decades.
Japan's exports halved in January.Japan's current account recorded its largest deficit on record in January, reaching 172.8bn yen ($1.8bn). This is Japan's first deficit in 13 years.In forex trading yen has weakened further.
Corporate blow: Car exports alone dropped 66.1%, with semiconductor and electronic parts exports down 52.8%. Consumers around the world no longer want to buy Japanese cars. Consumers in Asia, Europe, the Middle East and the United States are not buying pricey Japanese goods such as cars and electronic goods.
Honda has had to cut production, and Sony is set to register its first annual loss in 14 years. Shares tumbled on the news, with the benchmark Japanese index, the Nikkei, closing down at a 26-year low.
Dismal Economy: "We incurred the current account deficit due to a plunge in exports. Our exports to key regions, including the United States, Europe and Asia, were all down sharply due to the deteriorating global economy," a finance ministry official said. "Japan's export-driven economy is really engulfed by waves of the global economic crisis. “An economist pointed out.
Japan has already passed the legislation to hand out cash to its people as an economic stimulus.
U.S. Jobless rate Increases: The US jobless rate jumped in February to 8.1%, according to official figures from the U.S. Labor Department. The number of people out of work rose by 651,000 during the month.Both figures are bigger than expected. A total of 12.5 million people are now unemployed in the US.
President Obama said that the number of jobs lost so far in the recession was "astounding" adding that he had signed his economic stimulus package in order to save jobs.Rising unemployment has also meant greater demand for free meals.
Across sectors: Jobs were cut in most sectors, with only government, education and health services adding staff. In the manufacturing sector 168,000 jobs were cut in the month. 104,000 jobs went in construction and 375,000 were cut in the service sector.
Grim Future Ahead: Federal Reserve Chairman Ben Bernanke told Congress earlier in the week that economic indicators "show little sign of improvement" and that "labor market conditions may have worsened further in recent weeks".
Japan's parliament has passed legislation to give a cash hand-out to every resident in an attempt to boost the recession-hit economy. People will get at least 12,000 yen ($121) under the $20bn plan. In forex trading Yen has been growing weaker.
There are fears however that most Japanese people, who have a strong tradition of saving, will hang on to the cash instead of spending it. The cash hand-out is the centerpiece of a stimulus package to revive Japan's economy. Japan is in a far sharper recession than the US or Europe.
Japan's GDP had dropped 3.3% in the final quarter of 2008, a much steeper decline than in the US, which saw a 1.6% drop. UK’s economy had contracted by 1.5%.
Critics of the plan say it is a ploy to boost the popularity of Prime Minister Taro Aso and this will only expand Japan's already bulging budget deficit.The legislation enacting the stimulus plan has been mired in Japan's parliament for weeks. In a political battle sort of, the bill was passed after the government-controlled lower house overruled a no vote in the upper house, which is dominated by the opposition.
Japan has been one of the first countries in Asia to be hit by the global meltdown and lead the recession into the continent.
Standard Chartered bank which focuses on Asia, Africa and the Middle East, has defied the gloom afflicting the banking sector by reporting a rise in profits. The bank said its pre-tax profit for 2008 was $4.8bn (£3.4bn), up 19% compared with a year earlier.
A spokesperson for the Standard Chartered said that it was on a "firm footing" for 2009.It warned, however, that its core markets, which have so far proved more resilient to the credit crisis, have begun to feel the heat.
John Peace, the acting chairman of Standard Chartered, said last year's turmoil on the financial markets had been "truly extraordinary" and an extreme test for the banking industry. He warned further the uncertainty and the contraction of economies will continue this year and the situation can worsen.
The company said its focus on Asia and its sensible attitude to liquidity and costs had helped it to weather the storm.
The bank’s chief executive remarked that the over-leverage and over-complexity of the banking crisis in the UK and the US are not present to nearly the same extent in Asia. Asian banks, even while they are feeling the stress of dollar liquidity drying up and credit environment deterioration, are in much better shape than many counterparts in the West.
U.S. has raised its stake in Citigroup. The government has also already extended its aid to AIG this week as part of a new government rescue bid.
Forex and financial markets have been gripped by fears the global financial sector may perform worse than calculated. Investor confidence has already been hit by talk that US insurance giant AIG will need a further injection of government cash with its report due to be released today.
In Europe, the UK's FTSE 100 fell by 3.2%, while Germany's Dax was down 2.76% and France's Cac 40 lost 2.67%.Earlier in Asia, Japan's Nikkei 225 index closed down 288.27 points, or 3.8%, at 7,280.15. In Hong Kong, the Hang Seng fell 3.9% to 12,314.5 points.
China's manufacturing sector had declined further last month. South Korean imports and exports slumped to a record as well. Japan reported a steep drop in car sales. Weak economic data from China and South Korea has also underscored fears about Asia's export-dependent economies.
Monday morning slide in forex and stock indices was followed by a poor performance on Wall Street on Friday last week after data showed that economic growth was even weaker than thought.
This is turning out to be one of the most tumultuous times on record in the global financial markets. "You're seeing the U.S. is sinking lower and lower, and we're still desperately searching for a bottom," remarked an analyst.
The U.S. Treasury Department reached a deal late Thursday to take a stake of 30 to 40 percent in Citigroup as part of a third bailout of the embattled bank, according to several people close to the deal. Vikram S. Pandit, the chief executive, will remain at the helm, but Citigroup will have to shake up its board so that it has a majority of independent directors, a move that federal regulators had already been pursuing.
The Obama administration will probably come under intense pressure to take a much larger role in shaping the bank’s direction. Taxpayers, after pumping more than $45 billion into the bank, have become Citigroup’s single largest shareholder. The government will not put in any additional money for now, but some analysts believe Citigroup may require more down the road.
The move is one of the most drastic steps federal officials have taken to prevent the collapse of an institution deemed “too big too fail,” as its downfall could send shockwaves through the global forex trading and financial markets. The government also took a major ownership stake in the American International Group, AIG, which is already seeking additional funds, and seized control of Fannie Mae and Freddie Mac in September. So far, none of those deals have turned out well.
Japan’s exports fell by 46 percent in January, and Hong Kong’s economy contracted 2.5 percent in the last three months of 2008, furthering signs that the economic downturn in Asia is set to drag on through this year.
Japan leads recession in Asia: The Japanese economy was one of the first in Asia to tip into recession since last three months of 2008 as weakness stemming from poor domestic demand was mixed with evaporating demand from overseas. Exports plunged 46 percent from a year earlier and imports dropped 32 percent. Similar sharp declines have been reported recently by China and Taiwan also.
Worsening Yen: Japan’s export decline was significant from a grim December 2008, when exports fell 35 percent. The yen — whose strength against the dollar has made Japanese goods more expensive for American consumers — has weakened during the last three weeks, trading at around 97 to the dollar on Wednesday, compared with about 89 in early February. Exporters have continually cited the yen as a main reason for sharply reduced sales that are expected to lead to deep losses this year.
Rest of the Continent: In Hong Kong, the government said on Wednesday that it expected the economy to shrink 2 to 3 percent in 2009. Elsewhere in the region, South Korea said it would start a $13.2 billion fund to bolster its commercial banks .India had Malaysia have already recorded the slowest growth in at least last seven years. Much of Asia’s growth in recent years was based on an export boom, allowing the recession in the United States and Europe to spread through a region that had been insulated from the American financial troubles that ignited the current downturn.
The dollar strengthened against the euro after President Barack Obama expressed optimism that the U.S. will emerge from its recession “stronger than before.”
The greenback gained for a third day versus the yen as well in forex trading as Obama said the world’s largest economy “will recover” and the tools to revive growth were within reach. Japan’s currency fell for a sixth day against the euro, the longest stretch since April, after the Ministry of Finance said the trade deficit widened in January to the most since at least 1986. The dollar rose to $1.2816 per euro as of 1:40 p.m. in Tokyo from $1.2846 late yesterday in New York. The greenback climbed to 97.10 yen from 96.64 yen.
“The markets like the fact that Obama’s trying to tighten things up and striking an optimistic tone…that would be supportive of the dollar.”Obama, delivering his first address to a joint session of Congress, also said the credit crisis paralyzing the banking system must be fixed or “our recovery will be choked off before it even begins.”
”AIG is already seeking additional funds from the Government before its report due on nest Monday.
U.S. Secretary of State Hillary Clinton said on Saturday the United States and China could help the world recover from economic crisis by working together, adding that Washington appreciated Beijing's confidence in U.S. government debt.
"I appreciate greatly the Chinese government's continuing confidence in United States Treasuries. I think that's a well grounded confidence," Clinton said at a news conference with Chinese Foreign Minister Yang Jiechi.
China invests the bulk of its reserves in liquid debt, notably U.S. Treasury bonds. Beijing is wary of taking excessive risks after suffering heavy book losses on stakes in financial firms such as Blackstone and Morgan Stanley.
On Friday, Clinton said Washington would press China on human rights but added that this would not keep them from working together on a range of issues such as the financial crisis. The United States has long accused China of human rights abuses and pressed Beijing to grant greater autonomy to Tibet. Clinton will also meet President Hu Jintao and Premier Wen Jiabao on Saturday.
Meanwhile U.S. President Barack Obama vowed strict oversight Friday of his $787 billion stimulus plan, pushing back against Republicans who have labeled the centerpiece of his economic agenda fiscally irresponsible.
Obama said he would name a team of managers to ensure that billions of dollars slated for infrastructure projects would be spent wisely. "The American people are watching. They need this plan to work. And they expect to see the money they worked so hard to earn spent in its intended purpose without waste, inefficiency, or fraud." Obama said at a gathering at the White House. The signing this week of the bill -- the most expensive in history -- marked a big victory for Obama and his Democratic allies in Congress.
The euro rose from near a three- month low against the dollar since yesterday on speculation German Chancellor Angela Merkel will signal Europe’s largest economy plans to take action to help avert the financial turmoil in the region. Optimism about the stabilization of the European financial system is being seen as helpful to halt the recent steep decline of the euro.
The euro climbed to $1.2589 as of 12:57 p.m. in Tokyo from $1.2530 late in New York yesterday, when it touched $1.2513, the lowest level since Nov. 21.
Europe’s single currency advanced to 117.94 yen from 117.50 yen. The dollar traded at 93.69 yen from 93.79 yen yesterday, when it reached 93.96, the highest level since Jan. 7. The Bank of Japan may today unveil details of a plan to buy corporate debt and extend lending programs in place to prevent a shortage of credit from deepening the nation’s recession, according to a Bloomberg survey.
Bank Results can affect Euro adversely:
Gains in the euro may be tempered by concern European companies will report steeper-than-expected losses stemming from the global financial turmoil.
USD near Peak Versus Canada’s Currency:
Demand for the dollar was tempered by speculation the U.S.’s largest automakers will fail unless they get increased government aid. General Motors Corp. and Chrysler have a 70 percent likelihood of filing for bankruptcy.They are seeking as much as $21.6 billion in additional federal assistance.The Canadian dollar is being seen as emerging with a cyclical growth profile that is as good as or better than that of the U.S. dollar.
U.S. Data:
The Labor Department’s report on producer prices, scheduled for today, may show wholesale prices fell 2.5 percent last month from a year earlier, according to a Bloomberg survey, signaling the world’s largest economy may be heading for a period of sustained deflation. Federal Reserve policy makers lowered their projections for economic growth this year, with most seeing a contraction of 0.5 percent to 1.3 percent, according to minutes of the Federal Open Market Committee meeting Jan. 27-28 released yesterday.
Yen sees gain: The yen gained in currency trading for a third day against the euro on speculation European banks will reveal increasing losses due to the financial crisis in the region.
Yen strengthened versus 13 of the 16 most-active currencies on concern stock declines will spur investors to sell higher-yielding assets they bought with funds from Japan. The euro traded near a 10-week low against the dollar. The Risk-averse sentiment is being seen as likely to persist. “The yen may be bought.” Traders noted demand for the yen increased after Asian equities fell. The Nikkei 225 Stock Average slipped 1.4 percent and the MSCI Asia- Pacific Index of regional shares weakened 1 percent, prompting investors to reduce holdings of higher-yielding assets.
AUD weakens: Australia’s currency may slide to as low as 50 U.S. cents as the global recession can drive down commodity prices. The central bank may lower borrowing costs to a record. The global economic collapse, the weakness of commodity prices, the prospect of Australian interest rates going to 2 percent or less and a severe domestic recession suggest the Australian dollar could weaken sharply, accordingly to analysts.
BSE and NSE move upwards: Indian shares turned positive after opening 1.1 percent lower on Wednesday as investors hunted for bargains in the battered market that had fallen 6.2 percent in the previous two days. Technically, the market had become oversold-so now it is rebounding, remarked an analyst here in Mumbai. By 10:05 a.m. (0435 GMT), the 30-share BSE index was up 0.38 percent at 9,069.26 points, with 21 components rising. The 50-share NSE index was up 0.47 percent at 2,783.60.
Current recession one of the worse: Alan Greenspan, the former U.S. Federal Reserve Chairman on Tuesday said the current global recession will be the longest and deepest since the 1930s and more government rescue funds will be needed to stabilize the U.S. financial system. In a speech to the Economic Club of New York Greenspan said The U.S. Treasury's Troubled Asset Relief Program (TARP) designed to help bail out banks has been partially successful and that additional funds will be required to stabilize the American banking system and restore normal lending.
Euro Worsens Against Dollar,Yen: The euro fell to a 10-week low against the dollar adding to concern financial turmoil in the region is worsening. The euro also weakened against 14 of the 16 major currencies on speculation its recent declines triggered the execution of automatic sell orders. Meanwhile the yen here also dropped to a five- week low from yesterday against the dollar after Japan’s Finance Minister said today he would resign after budget bills are passed in the nation’s parliament.
Report pushes euro further down: The Moody’s research and risk analysis report aided push euro down below 1.27 and accelerated dollar gains across the board. The euro needs to find support at $1.2330, the weakest since April 2006, which it touched in October, according to analysts. The euro’s decline against the dollar and the yen accelerated after stop losses on investors’ long positions on the currency were activated.
Traders said a sudden bout of heavy selling had forced the euro lower, triggering a series of sell orders and sending it down about 1 percent to $1.2665, it’s lowest since early DecemberU.S. markets were closed for a holiday on Monday, when the euro lost about half a percent against the dollar and 0.8 percent against the yen as European equities fell and concerns about western banks' exposure to problems in Eastern Europe weighed.
Japan’s Concern: Japan’s Finance Minister’s resignation spurred growing concern over the world’s second-largest economy .The market sentiment is to short the dollar and long the yen, so there’s a bias to buy back the U.S. currency and sell Japan’s, with forecast predicting the yen may fall to 93 per dollar today. Japan’s benchmark index Nikkei fell to its lowest in more than two months as the stronger yen hurt exporters and investors await the U.S. automakers' plans.According to a Reuter’s poll, Confidence among Japanese manufacturers remained mired near record lows, as exports and output dived amid the global slump and deepening recession at home.
Yen Rises, South Korean Won drops to two month low: The yen climbed to 91.65 against the dollar as of 2 p.m. in Tokyo from 91.93 late in New York on Feb. 13 in forex trading. It advanced to 116.92 per euro from 118.37. Japan’s currency gained 1.2 percent to 59.63 versus Australia’s dollar and rose 1.1 percent to 47.50 against New Zealand’s dollar. The U.S. dollar gained to $1.2756 per euro from $1.2862 in New York last week, and climbed to 1.1668 Swiss francs from 1.1590. The British pound fell 1 percent to $1.4214 and weakened 0.2 percent to 89.75 pence per euro.
The yen snapped two days of losses against the dollar from the Friday session last week.
South Korea’s won shed 11 percent this year, the biggest drop among the 10 most-traded Asian currencies outside Japan, on concern that a deepening global economic slump will discourage investors from buying emerging-market assets. A forecast revealed the Korean economy will shrink 6 percent this year as the world recession takes a bigger toll on over-leveraged households and smaller companies than during the 1998 Asian crisis. Geithner Pressed By G-7 to Push Ahead With Bank Bailout Plan: Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system. The G-7 repeated its traditional message that “excess volatility” and “disorderly movements” in exchange rates must be avoided. The group accounts for about two-thirds of the world economy composing of the U.S., Japan, Germany, U.K., Italy, Canada and France. The yen rose against the euro and the dollar after finance ministers from the Group of Seven nations said the “severe” global slump will persist for most of 2009 and Japan’s economy shrank by the most since 1974, spurring investors to sell riskier assets. White House dampens stimulus expectations: President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually. "The acceleration in job loss probably means that this economy is going to get worse before it gets better," he said. The Republicans kept up their criticism on the bill saying it is incredibly expensive. “It has hundreds of billions of dollars in projects which will not yield in jobs," said John McCain, whom Obama defeated in last year's presidential election.
An economic stimulus package worth $787 billion is headed to President Barack Obama’s desk after Congress passed the plan that Democrats say is critical to helping pull the U.S. economy out of recession. The Senate late yesterday voted 60 to 38 to approve the package of tax cuts and more than a half-trillion dollar in new federal spending. The votes give Obama the first major legislative victory of his presidency.
Democrats predict the plan will save or create 3.5 million jobs. Its costliest item is a $400 payroll tax cut for individuals and $800 for couples. Retirees, disabled veterans and others who don’t pay payroll taxes will get a $250 payment. Democrats released the text of the plan late the night before the vote, prompting complaints from Republicans they didn’t have enough time to review the legislation before voting on it. “It is over a thousand pages- it’s physically impossible for any member to have read this bill.” said a representative from Georgia Republican. Republicans argued that the bill contains too much government spending and, because of that, won’t do enough to boost the economy. The New Hampshire Republican senator Judd Gregg, who withdrew this week as Obama’s commerce secretary nominee, voted against the plan saying the “so-called stimulus plan has become sidetracked by misplaced spending and a lack of attention to the true problems facing the nation.”
The stimulus plan provides a half-trillion dollars for jobless benefits, renewable energy projects, highway construction, food stamps, broadband, Pell college tuition grants, high-speed rail projects and scores of other programs. It raises the nation’s debt limit to about $12 trillion.
The nonpartisan Congressional Budget Office said the stimulus package will cost $787 billion, rather than $789 billion lawmakers estimated earlier this week. The plan will pump $185 billion into the economy this year and $399 billion next year, the agency said.A Wisconsin Democrat said as he urged passage of the bill, “The other tool normally available to us is monetary policy in the form of low interest rates through actions of the Federal Reserve. We’ve already fired that bullet - - the only bullet left is fiscal policy.”
Yen Falls on hope Risk Appetite Will Revive: The yen dropped against the euro and the U.S. dollar as optimism about government efforts to revive global growth improved investors’ appetite for riskier assets, pushing up Asian stocks and Forex market for the first time this week. The yen also weakened against the Australian and New Zealand dollars after Australia’s Senate approved a 42 billion AUD ($28 billion) stimulus package aimed at ensuring the economy doesn’t enter its first recession in 18 years. The greenback fell for the first time in four days on speculation a U.S. report will show that confidence among consumers declined in February, adding to signs the recession in the world’s largest economy is worsening.
G7 Meeting: Finance ministers and central bankers from the Group of Seven major industrial nations meet in Rome here today and tomorrow. They plan to discuss exchange-rate developments.
Indian shares rise: Indian shares rose 1.8 percent on Friday as investors speculated on a fiscal stimulus package in an interim general budget on Monday and supported by firmer Asian markets. Traders said expectations an interim railway budget, scheduled to be presented to Parliament at 11 a.m. (0530 GMT), would propose lower freight rates also underpinned sentiment.
Stimulus Aims Two-Phase Jolt at U.S. With Tax Cuts, Spending: The stimulus plan emerging from Congress may jolt the U.S. economy in successive waves: relief to cash-strapped consumers, businesses and states, then a job- creating lift from spending on roads, utilities and public transit. Economic activity begins to tick up in third quarter of 2009, but the biggest effect of the stimulus bill is being expected in 2010.The hope is, with the stimulus, that we actually stop losing jobs by the end of this year, marked an analyst. The stimulus bill contains about $54 billion to help states with expenses. The plan has more than $60 billion to increase unemployment benefits and a boost to food-stamp programs, housing assistance programs and other aid for the hardest-hit Americans.
Obama Pays Tribute to Abraham Lincoln: The United States on Thursday 12th February, marked Lincoln's 200th birthday with ceremonies at the US Capitol in Washington and at historical sites across the country, including his presidential library in Springfield, Illinois and the Gettysburg battlefield in Pennsylvania. President Barack Obama often invokes the name and symbols of the assassinated president who ended slavery and brought the U.S. through the Civil War. Both men rose from the Illinois state legislature to the highest office in the land and both built reputations as skilled political orators.
Asian stocks fell for a fourth day, led by financial and consumer-related companies, on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy. The U.S. stimulus plans are still lacking in details,” remarked an analyst from China. “It’s still unclear how they are going to bailout the banks. The market had been awaiting the financial bailout plan with high hopes, but what was announced didn’t have much meat on the bone,” said a Tokyo-based strategist in an interview with Bloomberg Television.
The MSCI Asia Pacific Index fell 1.5 percent to 81.75 at 11:32 a.m. in Tokyo, with about three stocks advancing for each one that declined. The gauge has lost 8.8 percent this year, extending 2008’s record 43 percent, as the credit crisis triggered by the collapse of the U.S. housing market dragged the world’s biggest economies into recession.
The Nikkei 225 Stock Average slumped 1.7 percent, to 7,814.01, resuming trade following a holiday yesterday.
Indian shares started 0.6 percent lower on Thursday following losses in Asian markets on uncertainty about the global economic outlook.Top-listed Reliance Industries and outsourcer Infosys Technologies were the main losers.
The safe-haven currencies benefited amid heightened risk aversion, with the dollar and yen advancing against the majors. US Treasury Secretary Geithner provided additional details on the Obama administration’s financial bail-out plan – prompting a sharp sell-off in stocks. The Dow Jones and S&P 500 were both lower by over 4% and the NASDAQ sliding by nearly 3.5% in the New York afternoon.
Geithner described buying up to $1 trillion in banks’ toxic assets and up to $1 trillion in purchases of consumer debt – in an effort to free up the credit markets. Geithner fell short of providing any key details on a comprehensive bail-out program, prompting markets to sell-off sharply amid growing uncertainty over the prospects for the government to successfully.
Euro Pressured on Russian Debt Restructure rumor:
The euro whipsawed around the 1.30-level against the greenback in the Tuesday session on a combination of news about the US financial rescue plan and speculation over potential debt restructuring by Russia. The heightened risk aversion prompted the euro to slide to 1.2812 versus the dollar and 116.68 against the yen. EURUSD remains mired near the 1.29-level, with support seen at 1.2880, followed by 1.2820 and 1.28. Further selling pressure will be tempered at 1.2770, backed by 1.2740 and 1.27. Gains will target interim resistance at 1.2930, followed by 1.2970 and 1.30. Subsequent ceilings are seen at 1.3040, followed by 1.3070 and 1.31.
Oil prices fell below $41 a barrel on Friday in Asia as soaring U.S. unemployment and bleak corporate results kept investors pessimistic about demand for crude."We’re seeing too much bad news coming out of companies," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "If companies are still laying off workers, then economic reports are going to be pretty bad going forward.” With millions out of work, investors fear a downward spiral of falling consumer demand and company losses could lead to further job cuts and weakening crude demand reported the Associated Press.
The Dow Jones industrial average rose 1.3 percent Thursday.
Investors are also watching for possible further production cuts by the Organization of Petroleum Exporting Countries, which has already promised to reduce output by 4.2 million barrels since September.
Meanwhile Bloomberg reported Crude oil fell on concern that fuel demand in the U.S., the world’s biggest energy consumer, may decline as a report showed the number of newly jobless climbed to a 26-year high. A release today may show the jobless rate rose to 7.5 percent in January. Oil is poised for a 2 percent drop this week, the smallest weekly change in more than five months. Prices declined 10 percent last week.
Volatility Drops: Oil prices have remained near the $40 level for the past five trading sessions. The 30-day historical volatility for crude oil has fall to 92.28 percent today, the lowest since Dec. 19, according to data compiled by Bloomberg.
Obama seeks coordination of worldwide efforts
