BetOnMarkets Afternoon Report


BetOnMarkets Representative
Just two months ago, the US Federal Reserve was still concerned about the “upside risks to inflation”. With today’s record 1% decline in US consumer prices, we’ve gone from fears over inflation and stagflation all the way to deflation in the space of 90 days. Traders have shrunk their investment outlook from years to days as they attempt to keep track of the violent changes in the stock market and economic outlook.
Today, most financials stocks are under pressure, led by HSBC who received a broker down grade on fears of the state of its tier 1 equity ratio. HSBC was formerly at arms length to the rest of the banking sector with its relatively low exposure to US subprime loans. However, the world’s local bank is now feeling the pressure due to its exposure to emerging economies, especially the so called BRIC nations. Brazil and India have seen their stock markets drop around 50% from their highs, while the Chinese stock market has nearly dropped a staggering 70%.

In general, hope remains while the benchmark S&P 500 continues to hold above the key 850 level. However, any breakdown below there could bring a fresh wave of selling.