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As companies and organisations across the world try to weather the economic storm gripping the world, some countries are also under a lot of pressure. Some had thought that only businesses are being affecting but this crisis is gripping the whole world and even countries are getting into trouble, of note, Iceland.
Jason Simpkins from Money Morning takes a look at the current situation in Iceland:
The government of Iceland yesterday (Tuesday) pegged its currency to a basket of foreign currencies, nationalized its second-largest bank, and pleaded with Russia for a $5.4 billion loan - all in a desperate attempt to prop up the island nation’s ailing economy.
If this were football, and the JSE were down 3 - 0 at half time after yesterdays slump, then today, the JSE would have pulled a goal back to make the score 3 - 1. The JSE staged a recovery today, the all share index ended 2.56% higher, largely due to a 3.27% rise in resources. The platinum mining index rallied 3.57%, but the gold mining index shed 0.96%. Firmer metal prices spurred a fresh round of buying for mining stocks which resulted in platinum miner Anglo Platinum (AMS) rising 6.79% to R582, Impala Platinum (IMP) gained 1.17% to R130 and Lonmin (LON) was up 6.54%, to R259.95. Investors are still looking to buy into resources at this stage, notably gold as they see it as a safe haven. This resulted in the price of gold to increase by 2% today.
Brewer, SABMiller (SAB) caught the eye today as it soared 8.57%. Could this have been spurred by the introduction of their new beer, Dreher onto the local market or just generally that, even during tough times consumers are still going to drink?
The rand continues to hover around the R8.82/$ mark with growing fears that the local currency could soon hit the R9.00/$ mark. One would assume that exporters would be very happy with the rand trading at R9.00/$ but with the current slow down in the world economy, the goods and services that would be exported may not be consumed by the consumers in the foreign countries that are struggling to get to grips with what is happening in the world markets.
Major indices around the world plunged yesterday (Monday), as the credit crisis picked up momentum in Europe and markets in Asia began bracing for a deep recessionary environment in the West.
The Dow Jones Industrial Average careened below 10,000 points for the first time since 2004 yesterday, after plummeting 500 points in the first hour of trading. The Dow closed down 369.88 points, or 3.6%, on the day at 9,955.50, after earlier surrendering as much as 800 points.
The Standard & Poor’s 500 Index shed 42.38 points, or 3.95%, to 1,056.85 and the Nasdaq Composite Index tumbled 137.52, or 7%, to close at 1,809.
With the JSE slumping today by 7%, the local currency also took a huge knock. The rand lost 5% today against the US dollar. Just after 16:00 today, the rand was trading at R8.90/$ its weakest level since January 2003. Some people out there may think that this slump in the rand is because of the political changes taking place in South Africa right now but that is not the case. It is true that political instability can affect a local currency but in South Africa’s case, the falling of the rand is largely attributed to the chaos on Wall Street which is causing panic on the world markets.
What a day for the JSE! The all share index closed 7.30% in the red today. This is the lowest the index has been since 2006. The local markets are still not sure how to react to the financial crisis gripping the US economy and ultimately affecting the global economy. The $700bn US bailout has been approved but what next for the markets? Markets do not like uncertainty and this is being highlighted by the current slump we are seeing in the markets.
Just looking at how serious things were today on the JSE: Resources were down 9.18%, Platinum stocks lost 10.41% and gold miners only shed 0.83% as investors look to invest in gold as a ’safety net’ during this turbulent time. Industrials fell 5.83%, financials shed 6.44% and banks were down 9.10%. Read the rest of this entry »
There was some relief today for consumers in South Africa as the price of fuel dropped at midnight last night. The price of 91 octane petrol decreased by 29 cents a litre, while 93 octane dropped by 27 cents and 95 octane by 25 cents. The wholesale price of diesel dropped by between 55 and 65 cents a litre, whereas the wholesale price of illuminating paraffin also dropped by 65 cents a litre. This is the third consecutive month that fuel prices have been cut. The Department of Mineral and Energy says lower crude oil prices contributed towards the price cuts. But for how long will the crude oil prices remain low? Not for long according to analysts in the US. Following on from the financial crisis gripping the US right now, some are predicting the crude oil price to rise as high as $250 a barrel. This would certainly not be good news for consumers across the whole world.
I’ve been predicting record oil prices for a number of years now, so when crude oil prices recently plunged from their record highs, I warned investors and consumers that the decline was nothing more than a temporary respite.
But now it’s clear that the fallout from the $700 billion banking bailout pact will virtually guarantee that my prediction will come true.
As the curtain closed on the third quarter yesterday (Tuesday) - leaving many investors worried that the long-feared "Super Crash" was imminent - crude-oil futures were staring at their first decline in seven quarters and their biggest quarterly decline in 17 years, thanks to worries that a slowing economy would curtail global demand. As of early afternoon yesterday, crude oil for November delivery had dropped $39.36 a barrel - or 28% - during the third quarter to close at $100.64 yesterday afternoon.
