Daily Market News Digest

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Hello Traders
Here's the story for today

U.S. Budget deficit more than $1Trillion
The U.S. recorded a gigantic budget deficit of nearly $1 trillion in the first six months of this fiscal year which began on October 1.The estimates released on Monday by the Congressional Budget Office said the government likely recorded $953 billion in red ink from October through March.


Here's why Deficits matter

* Increased debt costs for government
* Increased risk of inflation
* Long-term pressure on dollar
* Could lead to higher taxes and spending cuts later


The CBO, the nonpartisan budget analyst for Congress, said the drop in corporate receipts was the largest in more than three decades.In addition to dropping revenue and the bailout money for Wall Street, the government has poured more money out the door to try to jump-start the ailing economy, which has been in recession since December 2007.

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China’s economy is in goof position than predictable, the Country’s Premier said, but in Japan a huge fall in wholesale prices showed the world’s second-largest economy was down back towards deflation.

Last month a jump in china’s industrial production, with a record climb in new lending, gave additional credibility to the plan that the bottom of the worst global financial crisis as the Great Depression may not be distant.
On Saturday, Premier Wen Jiabao told to the reporters in Thailand, that China’s economy had shown some latest signs, but we all know that our financial system still facing big difficulties.

The China Securities Journal reported on Monday that china was planning a new economic stimulus package targeted to increasing consumption, citing a senior officer of the State Information Center which is associated with the top planning agency of the country. The economic positions in Japan remain doubtful while in China things were looking intense.

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On Wednesday, Oil rose for the second day, nearing $49 a barrel on support from the bullish data and Wall Street on US oil inventories, though gains were tempered by weak demand data from major currencies.

On Tuesday, American Petroleum Institute numbers released after the close of trade showed a surprising fall in US crude stockpiles last week of 1 million barrels, increasing hopes that Energy Information Administration data on Wednesday could break the pattern of large stock builds.

Remarks from US Treasury Secretary Timothy Geithner the most US banks have sufficient capital also soothed nerves that had been battered by a larger than predicted record by America’s largest bank on Monday that sent oil prices losing 9%.

But the demand for oil remains weak with data from South Korea, Japan and China underlining this trend and OPEC member Iran saying the association may have to cut supply again in response.

US crude for June delivery rose 25 cents to $48.80 among thin trading with prices still less than levels over $50 seen before Monday’s equities-led fall.

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China’s economy to improve in second quarter enhanced by increasing investment and a slower decline in exports, a leading government economist remarks on Friday.

According to latest Forex updates the annual growth in GDP slows down in the first quarter from 6.8% to 6.1%, but economists said this marked a development in sequential, quarter-on-quarter increase.

This trend will continue, according to Zhang Liqun an economist with the Development Research Centre, a think tank under the China’s cabinet, the State Council, as demand and supply come into balance.

In March export declined by 17.1% from earlier year, improving from 25.7% decrease recorded in February. Zhang said that he expected exports for all of 2009 to reduce 10-15%.

The pace of investment, which rose up sharply in the first quarter will continue to gather momentum all through the year, Zhang said, without giving any estimate.

Fixed-asset investment expanded 28.8% in the first three months as compared with past years as the first stage of Beijing’s 4 trillion Yuan ($585 billion) stimulus planned break down.

The economist said that he expected a development in overall domestic demand, determined in part by real estate markets.

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On Friday, the Federal Reserve of the US released an expected report which has shown that the present financial condition and wild market instability have ‘substantially reduced’ the fiscal reserves at some of the major banks are under operations. However, the report has shown that the most firms still hold excess reserves in accordance with the previous regulatory standards.

This report is planned to restore the public’s confidence that the biggest of banking institutions in the US are stable. The stress test is done with the 19 banking institutions in the US with methods used to decide the strength of the banks portfolio by suggesting two different situations with the final results being released in ten days, on 4th May.

Regulators who performed the tests required to keep financial institutions lending over the coming years also decided the amount of capital they may require during a protracted and/or worsening economic slump. The amount of capital each institution holds will predict the company’s ability to remain earnings over the course of the coming years, including access to private capital in future and the ability to cover future draw downs on capital.

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Analysts said that the gain is riskier currencies was come from a confluence of improving US economic signs, indicates that the new flu strain occurrence seem less severe than rising stock markets. The S&P futures rose 0.5%, indicating a positive start on Wall Street later.

On Friday, Forex updates showed that US consumers felt more confident about the economy in April whereas a key gauge of manufacturing recommended the sector was slowly rising out of a deep fall.

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A stronger shrink in the European economy led the Euro towards a downfall, the worries about the Canadian financial system propelled the CAD higher and although Swiss retailing strike the expectations, the Swissy got elevated on the concerns about the central bank intervening in the currency.

Except of the Japanese yen the USD closed stronger against all of the other major currencies, in this week. On Friday the Euro (Euro/USD) fell 150 pips as the European economy contracted the most in 13 years, recovery will be slower than expected.

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There has been a come back of skepticism on stock trading and the market is reacting in conditions of a bounce back in the USD and the Stockholm-based SEB currency.