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Post by chiu on Aug 2, 2006 2:13:22 GMT -4
For the week ending 31 Jul 2006 : ECONOMIC OVERVIEW: Latest data leaves inflation risks unresolved ¡¤ The initial reading on second quarter growth was softer than expected at 2.5%, led by a slowdown in housing growth and consumer spending. ¡¤ However, indications on inflation are less clear, with new GDP data indicating visible increases in labour costs. ¡¤ Citigroup analysts note that the ongoing overshoot in core inflation (now at 2.3%) and the persistence of high-energy prices point to a final rate hike of 25 basis points in August. ¡¤ This hike would probably do more to ease inflation concerns than unsettle the growth outlook.
EQUITIES: Market likely to get a boost when interest rates peak. Week ending Jul 28, 2006: ¡¤ Equity markets ended the week positive, boosted by solid corporate earnings, renewed Merger & Acquisition (M&A) activity and lower oil prices. ¡¤ Industrial activity is slowing, and this may not have been built into current earnings expectations, say Citigroup analysts. ¡¤ With more data pointing to an economic slowdown, the end of the tightening cycle should be more apparent to investors, thereby giving markets a boost. ¡¤ However, this is likely to take a few months. Citigroup analysts expect markets to pick up over a six-month period.
IP Right belongs to Citibank
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