US Economic Crisis Makes World Headline News
The world’s financial eyes are on the US as their stock market, real estate and retail sectors take a battering fuelled by hiking interest rates and sub prime borrowing.
Problems in the mortgage sector have had a huge knock-on effect on the US stock market, with an early fall in trading, which saw the Dow Jones drop a massive 208 points to 13,029 and the Nasdaq down 43 points to 2,499, at the beginning of the week. Investors also reacted badly to recent investment news that Wal-Mart and Home Depot warned of falling profits. The countries largest mortgage lender, Countrywide Financial, saw share prices fall by 13% on Wednesday and fears that if the market continues to deteriorate, the company could face bankruptcy.
As US interest rates have increased over the past year, a record number of sub-prime (poor credit or low incomes) borrowers have defaulted on their loans, leading to extreme financial pressures for firms exposed to the sector. The development and construction industry has also been hit hard as the number of new homes being built in the US is now close to a 10-year low and repossessions of the existing housing stock is at a record high.
The effect of which has heightened fears that loans will become harder to come by, not only in the housing sector but in the wider economy, leading to an overall slowdown in the economy. Home Depot, the US DIY store chain, has blamed this slowdown directly on the US real estate market and warned investors of a second fall in profits within two months. The company who previously predicted a 9% drop in profits by now expects its 2007 profits to decrease by 15% to 18%.
Home Depot said that in this current climate the sector will continue to see losses, way into 2008. After a steep rise in interest rates, over the last few years, the US housing market has been hit hard by a further rate rise and as such property reports show prices are falling dramatically. ‘Housing turnover continues to slow and prices continue to come down,’ said Keith Davis, an analyst with Farr Miller Washington. ‘People aren’t spending the way they had been on home improvements.’ Fellow retail analyst Bill Schultz of McQueen, Ball & Associates said the Home Depot warning ‘really shows how deep this housing downturn is.’
In a bid to hold on to investor’s money, Sentinel Management Group, which manages $1.6bn in funds, darkened the mood further by trying to block the withdrawal of investment from their funds. A slump in available credit prompted the US Central Bank into pumping billions of dollars in emergency funds, back into the banking system to try and ease the countries financial melt down.
For information on global emerging market property investment opportunities and to find out about Obelisk International’s latest projects, contact: Obelisk International on 0808 1600670 or email info@obeliskinternational.com
Or visit our website: http://www.obeliskinternational.com/
Problems in the mortgage sector have had a huge knock-on effect on the US stock market, with an early fall in trading, which saw the Dow Jones drop a massive 208 points to 13,029 and the Nasdaq down 43 points to 2,499, at the beginning of the week. Investors also reacted badly to recent investment news that Wal-Mart and Home Depot warned of falling profits. The countries largest mortgage lender, Countrywide Financial, saw share prices fall by 13% on Wednesday and fears that if the market continues to deteriorate, the company could face bankruptcy.
As US interest rates have increased over the past year, a record number of sub-prime (poor credit or low incomes) borrowers have defaulted on their loans, leading to extreme financial pressures for firms exposed to the sector. The development and construction industry has also been hit hard as the number of new homes being built in the US is now close to a 10-year low and repossessions of the existing housing stock is at a record high.
The effect of which has heightened fears that loans will become harder to come by, not only in the housing sector but in the wider economy, leading to an overall slowdown in the economy. Home Depot, the US DIY store chain, has blamed this slowdown directly on the US real estate market and warned investors of a second fall in profits within two months. The company who previously predicted a 9% drop in profits by now expects its 2007 profits to decrease by 15% to 18%.
Home Depot said that in this current climate the sector will continue to see losses, way into 2008. After a steep rise in interest rates, over the last few years, the US housing market has been hit hard by a further rate rise and as such property reports show prices are falling dramatically. ‘Housing turnover continues to slow and prices continue to come down,’ said Keith Davis, an analyst with Farr Miller Washington. ‘People aren’t spending the way they had been on home improvements.’ Fellow retail analyst Bill Schultz of McQueen, Ball & Associates said the Home Depot warning ‘really shows how deep this housing downturn is.’
In a bid to hold on to investor’s money, Sentinel Management Group, which manages $1.6bn in funds, darkened the mood further by trying to block the withdrawal of investment from their funds. A slump in available credit prompted the US Central Bank into pumping billions of dollars in emergency funds, back into the banking system to try and ease the countries financial melt down.
For information on global emerging market property investment opportunities and to find out about Obelisk International’s latest projects, contact: Obelisk International on 0808 1600670 or email info@obeliskinternational.com
Or visit our website: http://www.obeliskinternational.com/
posted by Chris at 4:23 pm
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