Tuesday, 6 September 2011
Currencies: USD/JPY -
This past week, the Japanese government announced a plan aimed at weakening its currency, without directly intervening. The Japanese government has already stepped in three times to try and weaken the yen, which has risen some 6% against the dollar from the start of the year.In March, the yen hit a record high against the dollar, breaking through 80 yen for the first time since 1995. In early trading Wednesday, the yen was modestly higher against the dollar at 76.56.
Experts think the government may have to do more to really make an impact. Japan's currency plan follows an announcement by Moody's that it was downgrading the Japanese government's credit rating to Aa3 from Aa2 with a stable outlook. This sent the Japanese Nikkei down about 1%. The rating agency said the downgrade was also prompted by the growth of Japan's debt-to-GDP ratio. Moody's blamed the earthquake-tsunami disaster for the economic issues Japan is experiencing.
Financial highlights
The S&P 500 rallied 4.7%, marking the first weekly gain in more than a month. Stocks gained in four of the five sessions, though there was still plenty of volatility.
All 10 sectors advanced by more than 2.0% and recently hard-hit cyclical sectors outperformed. Consumer Discretionary rallied 6.0%, technology gained 6.2% and industrials grew by 6.0%.
In corporate news, Bank of America continued to make headlines throughout the week. There was plenty of speculation regarding its financial viability, which spurred Warren Buffett to reach out to the American bank. Buffett's Berkshire Hathaway invested $5 billion in exchange for preferred shares and warrants. The move helped lift shares of the bank to a weekly gain of 11%.
Stock Spotlight
The big corporate news this week was that Apple's co-founder and current CEO Steve Jobs announced that he has resigned from his CEO duties. This resulted in Apple shares rising by a factor of 7.7%. The rise was not completely clear but analysts suggest it may be due to market acceptance and clarity on the direction of Apple's future. Health concerns have been well known so the market had already priced in the possibility of Jobs stepping down. Although resigning his duties as CEO, Steve Jobs will remain chairman of the board.
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