Introduction
In this report it will highlight the key events that have happened within the UK and the international Financial Market during the week starting from 2nd to 8th February 2015. This include main event in the stock market, the developments in foreign exchange markets as well as interest rate and major news in the banking sector.
World stock Market
Market movements
S& P 500 / US equities This week Energy stocks led the higher in volatile trading conditions on Wall Street as equity bulls sought to put a miserable January behind. There have been further gains for crude oil prices and better optimism that hopefully Greece will reach deal to resolve its debt stand-off help the S&P 500 to rise sharply for a second day. New that
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The energy sector supported the FSTE 100 with further help by having a 4.5 per cent rise in BT after it finalised the £12.5bn charge of mobile group EE. The FSTE 100 has down from a five-month high with the help of the losses for gold mining stocks as the price of metal fell in the wake of a robust.
Eurofirst 300 / European equities Spanish stocks has political concerns of worries of the anti-austerity Podemos party as there are drawing strength from policies of the new Greek government. The Eurofirst 300 rose back towards seven-year high and Greek stocks leapt 11.3 per cent as a new government softened its stance towards Athens creditors. Also during this week LVMH has an 8.1 per cent rise on the news of a rise in fourth quarter sales which help lift the luxury goods sector, while Greek banking stocks had another positive session. The Greek banks came under heavy selling pressure after the European Central Bank tightened their access to cheap funding, helping drive the Athens market down 3.4 per cent. The current affairs over the uncertainties over Greece have leaded the Eurofirst 300 to end at a seven-year high. With the concern about the US economy and a new rise in oil prices.
Nikkei 225 / Japanese equities
Tokyo market have been undermining with the help of reports of worries over global growth prospects and disappointing national
The financial crisis of 2007-2009 resulted from a variety of external factors and market incentives, in combination with the housing price bubble in the United States. When high levels of bank and consumer leverage appeared, rising consumption caused increasingly risky lending, shown in the laxity in the standard of securities ' screening and riskier mortgages. As a consequence, the high default rate of these risky subprime mortgages incurred the burst of the housing bubble and increased defaults. Finally, liquidity rapidly shrank in the United States, giving rise to the financial crisis which later spread worldwide (Thakor, 2015). However, in the beginning of the era in which this chain of events took place, deregulation was widely practiced, as the regulations and restrictions of the economic and business markets were regarded as barriers to further development (Orhangazi, 2014). Expanded deregulation primarily influenced the factors leading to the crisis. The aim of this paper is to discuss whether or not deregulation was the main underlying reason for the 2007/08 financial crisis. I will argue that deregulation was the underlying cause due to the fact that the most important origins of the crisis — the explosion of financial innovation, leverage, securitisation, shadow banking and human greed — were based on deregulation. My argument is presented in three stages. The first section examines deregulation policies which resulted in the expansion of financial innovation and
The financial crisis that happened during 2007-09 was considered the worst financial crisis in the world since the great depression in the 1930s. It leads to a series of banking failures and also prolonged recession, which have affected millions of Americans and paralyzed the whole financial system. Although it was happened a long time ago, the side effects are still having implications for the economy now. This has become an enormously common topic among economists, hence it plays an extremely important role in the economy. There are many questions that were asked about the financial crisis, one of the most common question that dragged attention was ’’How did the government (Federal Reserve) contributed to the financial crisis?’’
Please summarise a recent event or development relating to local, regional or global activity that impacts our Investment Banking business. (150 words) *
An excess of regulation, rather than an insufficiency of it, was the principal cause of the recent credit crunch.
Several factors lead to the 2008 financial crisis. The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States. Credit rating agencies failed to price the risk involved with mortgage-related financial products accurately. The Government, concerned with not performing economically as well as the Clinton administration believed increasing home ownership was the answer and reduced obstacles (like loan income/debt documentation). The world 's insurance companies began insuring mortgage instruments. Excessive investment leverage, especially in the Banks and venture capitalist communities. And the Government did not adjust their regulatory practices to address 21st-century financial markets- especially in credit default swaps (CDS). These factors set the stage for disaster and greedy speculators wanting to short the housing market triggered it by systematically exposing the mortgage risks to the world.
During the lead up to the financial crisis of 2007-08, a term was coined to describe what was happening in the financial markets. The term was: Shadow Banking System. The creation of the term was attributed to economist and money manager, Paul McCulley, who described it as a large segment of financial intermediation that is routed outside the balance sheets of regulated commercial banks and other depository institutions (St. Louis Fed). In simpler terms, institutions that are in the shadow banking system are not regulated like commercial banks, and carry more risk due to their investments. Examples of shadow banking institutions are money market funds, mutual funds, hedge funds, etc. During the early 1990s, most American citizens didn’t know or never heard of money market funds or mutual funds; typically, the only people who knew of the “shadow banking system” were most likely senior officers at the big banks or individuals who were experts in the financial markets. However, that all changed. At the turn of the century, the shadow banking system started to gain steam and was growing at a faster rate than traditional banks. At the peak of its growth, right before the financial crisis, the shadow banking system, in terms of liabilities, was about 1.5-2 times larger than traditional banks (St. Louis Fed).
“The 2007-8 stock market crash was largely due to widespread defaulting on subprime mortgages.” (The 2007-08 Financial crisis in review) In other words, towards the end of 2006, almost all borrowers defaulted. Instead of getting money, lenders got houses back, and put them again on sale. With the huge number of houses on the market, the supply was massively high, while the demand was low. Hence, the bubbles started bursting and the prices of the houses started declining
The financial crisis of 2007–08, also known as the Global Financial Crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. Mr. Ben Bernanke, Chairman of the Federal Reserve at the time, believed it was equally problematic in many ways; although unemployment only reached half the level due to the Fed’s actions combined with a $700B stimulus. It collapsed large financial institutions, and stock markets dropped to half their pre-crisis level. The surface cause was the bursting of the U.S. housing bubble, which had peaked in 2004, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.
The definitive event of the early twenty-first century was The Financial Crisis of 2007-08. Since that event, scholars have tried to identify what the causes and the effects of the crisis. The causes and effects of the collapse are varied and many scholars show a consensus about what these causes and effects are.
Australia’s economy is one of the largest economies in the world, with a nominal GDP of over 2 trillion dollars. The Australian government has to deal with multiple issues in the macroeconomic world to achieve three goals. The factors affecting these goals have to be identified and either harnessed or blocked by the government. The Global Financial Crisis of 2007/08 also caused the Australian government to deal with its failure to reach its macroeconomic goals.
As most of the world knows oil prices have been plunging downwards since June 2014, in which a barrel of oil has fallen more than 70 percent from that time, was $90- $100 a barrel, now $40 a barrel and approaching $30 a barrel. This fall basically came about due to rapid increase in global oil production which started to exceed its global demand therefore forcing prices down. “Earnings are down for companies that made record profits in recent years, leading them to decommission more than two-thirds of their rigs and sharply cut investment in exploration and production. Scores of companies have gone bankrupt and an estimated 250,000 oil workers have lost their jobs.” (Krauss, 2016).
Better Markets is the voice of the people in the most important decisions about our financial markets. We are working for a balanced economy—one in which those who make and enforce the rules are thinking about the wallets, homes and dreams of the majority of Americans. As a nonpartisan, nonprofit advocacy organization, we seek action on Wall Street and in Washington, DC, that expands security, opportunity and prosperity for all.
The Global Financial Crisis of 2007-2008 is the worst financial crisis since the 1930’s The Great Depression (Reuters, 2009). Even if bailouts of banks by national governments prevented the collapse of major financial institutions, worldwide stock markets continued to drop. Evictions and foreclosures overwhelmed the housing market while severed unemployment embraced the labor market (Baily and Elliot, 2009). This global financial crisis was responsible for the decline in the consumers’ wealth, and contributed to the great recession and European debt-crisis (LA Times, 2012). Varying opinions have been suggested to address the origin of the global financial crisis including conflicting of interests, complicated financial instruments,
The financial crisis of 2007 arose when banks, such as HSBC announced losses due to mortgages in the US housing market (BBC News - Global recession timeline, 2016). The crisis had a global impact as financial systems are interconnected. This crisis had huge impacts in many countries. In fact, in 2009, the UK Chancellor, Alistair Darling announced that the UK had a record debt of £175 billion (BBC NEWS | UK | UK Politics | Tax rise as UK debt hits record, 2016).
The US oil and gas exploration and production industry consists of about 5,000 companies with combined annual revenue of about $290 billion and is expected to have a high-growth rate over the next two years. Key growth drivers include rising demand for energy (Hoover’s Company Profiles).” The companies involved also deal with many different factors in production, manufacture and distribution; including weighing the different global economic, political and environmental factors that are tied to profit. The fortunes of oil and gas companies are tied to overall supply and demand issues that are reflected in oil and gas prices. Price changes affect industry sectors differently. High prices for oil and natural gas benefit the upstream (exploration and production) companies but hurt the downstream (refiners) in the form of raw material costs. This affects the overall strength and profit of these companies, but many Oil & Gas companies are considered integrated, which means they are involved in all three sectors of the industry. The business diversification between the upstream and the downstream tends to mitigate the effects of oil and gas price fluctuations. Because they are usually more leveraged to the upstream, such companies general benefit from higher prices for oil and natural gas.