While we were expecting profit taking to kick-in after the "yes" vote on the US budget ceiling, we did not foresee the drop to be so severe. A series of worse-than-expected US economic releases plus the increasing premium over the sovereign debts of Italy and Spain had triggered a sharp fall in global markets.
The benchmark FSSTI fell 194.48 points or 6.1% to close the week at 2,973.92, its first sub-3,000 close since the Japan earthquake in March 2011. The Hong Kong Hang Seng Index dropped 1,494.11 or 6.7% to close at 20,946.14 and the US Dow decreased 698.63 points or 5.8% to close at 11,444.61.
After the US market had closed on Friday, S&P announced the downgrade of US rating from AAA to AA+. This has injected further uncertainty into the market and caused another wave of sell down in Asian markets this morning. We believe the sell down was caused by the uncertainty over the effects of the downgrade. The actual effect of the downgrade is still uncertain at current point - whether the downgrade would trigger fund redemptions, banks to set aside more capital and reduce lending, or just a non event. Investors are also looking towards the outcome of this Tuesday's US Federal Reserve Open Market Committee meeting on whether there will be another round of quantitative easing (QE3).
This news is after you said yzj is going to $2. Where is the $2?
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[abb 08-08-2011]:
Insightful commentary by Asiasons Research today:
While we were expecting profit taking to kick-in after the "yes" vote on the US budget ceiling, we did not foresee the drop to be so severe. A series of worse-than-expected US economic releases plus the increasing premium over the sovereign debts of Italy and Spain had triggered a sharp fall in global markets.
The benchmark FSSTI fell 194.48 points or 6.1% to close the week at 2,973.92, its first sub-3,000 close since the Japan earthquake in March 2011. The Hong Kong Hang Seng Index dropped 1,494.11 or 6.7% to close at 20,946.14 and the US Dow decreased 698.63 points or 5.8% to close at 11,444.61.
After the US market had closed on Friday, S&P announced the downgrade of US rating from AAA to AA+. This has injected further uncertainty into the market and caused another wave of sell down in Asian markets this morning. We believe the sell down was caused by the uncertainty over the effects of the downgrade. The actual effect of the downgrade is still uncertain at current point - whether the downgrade would trigger fund redemptions, banks to set aside more capital and reduce lending, or just a non event. Investors are also looking towards the outcome of this Tuesday's US Federal Reserve Open Market Committee meeting on whether there will be another round of quantitative easing (QE3).
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