Investors Vote of NO Confidence

Investors all around the world are pessimistic about the current economic situation despite optimism shown in governments. Central banks in Europe including the US have aggressively approved hundreds of billions of dollars to bail out ailing finance companies in hoping to ease the deteriorating financial and economical situation around the globe.

Those who still think that the economy would not go into recession is still in wonderland. Those who bought equity and properties last year wished that they should not have invested last year. We are currently only seeing the mortgage crisis affecting the financial markets but what we have not seen yet is the business, automobile and credit card loans which somehow will be a crisis if the economy goes into deep recession.

New economy data include drop of retail sales by 1.2%, higher than the 0.7% predicted by analysts, as reported in AP news. This made it clear that the consumers are more careful in their spending. Light, sweet crude oil fell $4.09 to settle at $74.54 per barrel on the New York Mercantile Exchange, a 13 months low. Price of Crude Palm Oil fell RM107 or 5.8% to close at RM1,743 per metric ton, currently at a price level 2 years ago.

Goverments are trying to cut spendings on developments and concentrate on developments that are crucial only. In Malaysia, the government is looking to relook at stop some projects. This may cause even more concern for the economy. In Singapore, a planned US$24billion petrochemical investment has been delayed because they are still not able to close its project financing.

Yesterday, the US benchmark index, the Dow Indutrial Average shed 733 points or 7.9% to close at 8577.91 points, almost wiping out the two days gains. The lowest close last week was on Friday at 8,451.19. In the Asian region, reaction was mixed but generally lower. Markets in this part of the world is expected to fall sharply amid the fall in the US and European market.

Investors have passed a vote of no confidence and expect the financial markets to fall lower and remain volatile.

Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.