This week, the Russian stock exchange came into worldwide focus as most Russian oil and gas companies declined over 10 percent. The slump was caused by investor?s fears that the Russian governments, led by people connected to the security agencies of the country, were eager to have a closer look at the murky privatizations of the 90?s. President Putin until now has not made any statement which could reassure investors. For further disruption of the market provided Mikhail Khodorkovsky, the head of Yukos, himself, as he mentioned that the whole affair would bring enormous damage to the Russian economy and it will lead to a new wave of capital flight. Indeed, the sharp decline of Gazprom, the Russian gas monopoly and UES, the Russian electricity provider, showed that also Russians are selling and not only scared foreign investors, as these two companies were mostly traded among Russians. The decline is likely to continue next week if there will not be no strong signs, preferably form the Russian president that the whole affair will end very soon.
Wall Street also lost some terrain this week as investors realized some profits after the remarks of the Federal Chairman, Allan Greenspan and the latest publishing of company earnings. Allan Greenspan could not increase the market?s confidence in the country?s economy as he intends to keep interest rates low to support the economic recovery.
In accordance with the US, Tokyo closed also lower, to be exactly at a two-week low on Thursday. The index fell below the important barrier of 9?500 points, due to heavy profit takings, especially in the technology sector.
The most noticeable development in the commodity markets was the launched criticism of the American Petroleum Institute (API) on the government?s energy police, calling to fight the growing natural gas shortage. The government, according to API, has done everything to boost demand of natural gas but simultaneously discouraged domestic developers. This move is aimed at putting pressure on the administration to open land which is currently closed for drilling in the west of the country and in US waters. Closed areas are expected to hold around 70 trillion cubic feet of gas. Furthermore, the construction of natural gas pipelines form Alaska and Canada should be facilitated. If no action is taken, the US industry fears that it will not be able anymore to satisfy domestic demand. API also complained that legal actions of environmental groups would hurt drilling activities.
The dollar got some support this week as new data on jobs and housing was published on Thursday, which gave some hopes for a robust recovery of the US economy. The number of new-built houses increased by 3.7 percent and unemployment benefit claimants fell by 29?000 to 412?000. A further indication was the Philly Fed survey on business optimism which rose 8.3 points. As a consequence, the dollar rose against the euro to $1.117 on mid Thursday. However, it has to bee seen if the additional disposable income goes into consumption or if it finds its way into savings.
Author: Andreas Wild
