| Market eyes RBI policy meet
Mumbai, July 29: The stock market will next week look up to the Reserve Bank of India, which will take a call on the interest rate regime on July 31, for further cues after taking a 542-point plunge on last week. The sharp fall on last trading day of the past week was triggered by sluggish global trends following reports of a weakness in the US housing market. The Indian housing market is also witnessing a correction with rising interest rates over the past few quarters and high property prices leading to a fall in home loan disbursals by the two biggest mortgage lenders in the April-June quarter, as compared to the first quarter of this calendar year. RBI will review its monetary policy on July 31 to decide on its course of action on key interest rates. However, some analysts expect good earnings to provide a cushion to the market as despite a sharp fall in the Sensex some counters had gained on better June quarter results.
S.Korea won up on rate rise, revived risk appetite
SEOUL, Aug 9 (Reuters) - The South Korean won rose against the dollar on Thursday after the central bank's unexpected interest rate rise and on reviving appetite for risk after the Federal Reserve's positive views of the U.S. economy. Foreign investors turned net buyers of Seoul shares after a prolonged period of selling in the KOSPI, and exporters bought the won for settlements, providing further support to the local unit. The won is seen rising further as supplies from foreign equity investors are likely to decrease and as South Korean companies keep winning big foreign orders. But the local currency gave up some of its early gains on offers from importers and as overseas investors sought to repatriate the proceeds from heavy sales of Seoul stocks. The won was last quoted at 922.8/3.1 per dollar, compared to its previous closing bid of 923.7.
Silly to rule out an interest-rate rescue
In the modern version of the beloved Thomas the Tank Engine stories, Harold the Helicopter is always on hand to help out when things get really messy. Whether lifting stray cattle that have wandered on to the railway tracks or delivering crucial bits of equipment to stalled engines all over the island of Sodor, Harold is a kind of vehicle of last resort for a system in episodic crisis. It is not known whether Ben Bernanke, the Chairman of the US Federal Reserve, was consciously invoking the redemptive spirit of Harold a few years ago in the midst of the last big financial crisis prior to the current one, when he talked of the virtues of a "helicopter drop" of money on to a needy economy. However, in financial markets, the remarks earned the future Fed Chairman the title "Helicopter Ben" and created an expectation that Mr Bernanke would generally favour riding to the rescue of troubled markets in times of crisis.
Home loan standards tightened
Washington — A majority of the nation's banks have tightened lending standards on subprime mortgages, the Federal Reserve said Monday in a survey that provided further evidence of the spreading problems in mortgage lending. The Fed said it found that 56.3 percent of banks responding to a survey reported they had tightened their lending standards for subprime mortgages, loans offered to borrowers with weak credit histories. The survey found 40.5 percent of banks responding said they had tightened loan standards for so-called nontraditional mortgages. The Fed defines this category as adjustable-rate loans with multiple payment options, interest-only mortgages and products referred to as Alt-A loans that offer such features as limited verification of incomes. The Fed survey found that even on prime loans, which offer traditional payment options such as 30-year mortgages to borrowers with strong credit histories, 14.3 percent of the banks responding said they had tightened their lending standards "somewhat." The Fed's latest quarterly survey of bank loan officers found them responding to growing troubles in subprime mortgage lending.
'Cut spending or rates will rise'
AUSTRALIANS must cut spending to help drive down inflation - or risk another rate rise later this year, the Reserve Bank has warned. The RBA's warning is backed by industry experts who argue homebuyers should merge debts and concentrate on paying off their homes. The RBA yesterday said inflation was stubbornly staying high because we are spending too much. It revised its annual inflation forecast of 2.5 per cent - warning it might break the upper limit of 3 per cent. If that happened, the bank's board would be almost certain to impose the sixth interest rate increase since the 2004 election. Mortgage Choice's Warren O'Rourke said owners should not panic. "The most important thing is to consolidate household debts into the mortgage where they will be charged a lower interest rate," he said.
Key rate stands unchanged
WASHINGTON -- Wall Street turbulence, Main Street credit problems and a nation-wide housing slump pose increasing risks to the economy, the Federal Reserve said Tuesday, even as it left interest rates unchanged. Although Federal Reserve Chairman Ben Bernanke and his central bank colleagues acknowledged challenges that have intensified since their last meeting in late June, they nonetheless expressed hope that the economy will safely make its way. .
Investors may look far from home
IF YOU CAN'T DEPEND on your home equity increasing during a U.S. housing downturn, where do you turn for growth? U.S. bonds offer cold comfort. With ultra-safe six-month Treasury bills yielding as much as 5 percent, your real return is paltry after inflation and taxes. What about U.S. stocks? The specter of a housing recession, consumer slowdown and more ugly surprises in the subprime mortgage market weighs heavily on Wall Street now. That leaves a compelling investment typically neglected by most investors: non-U.S. stocks with high dividends. Since the U.S. home market may get blistered further by a general economic decline, more houses coming on the market or bond yields surging, you will need to find growth elsewhere. If you haven't considered how the global economy is propelling emerging markets, it's time to take a hard look.
U.S. Federal Reserve to improve liquidity to bolster U.S. financial markets
WASHINGTON (AP) - The Federal Reserve, trying to calm financial turmoil on Wall Street, says it will improve financial liquidity to help bolster U.S. markets. The Fed, in a short statement, said it will provide "reserves as necessary" to help the markets safely make their way. The central bank did not provide details but said it would do all it can to "facilitate the orderly functioning of financial markets." The Fed's action comes one day after a financial panic about a credit crunch swept through Europe. That prompted the Europeans to pump US$130 billion into their financial system. The Fed moved Thursday to add an extra $25 billion in temporary reserves to the U.S. banking system. .
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