Good morning. Equity and Commodity markets were rocked by political fears in the Middle east and lower than forecast GDP results on Friday. Reporting a 3.2% rise in Gross Domestic Product for the period, traders were anxious over the long term outlook. The result was slightly below the 3.5% level that had been estimated by the market. Concerns that Egypt may lead to a further political contagion in the region helped support the safety assets, including bonds and currencies.
On the equity market front, the S&P500 fell 1.7% with a severe drop in risk appetite leading to a cross sector selloff. The shipping and logistics industries however bucked the trend with traders speculating that there could be a rise in alternative shipping avenues due to the Suez Canal shutdown. Affected by the Egypt political crisis, Apache Group weakened during afternoon trade on Friday. Falling 1.2%, analysts cited that the company relies on ¼ of its total revenues from the region.
On the currency front, the greenback rose against the Canadian dollar on friday with GDP data helping support the move. A rise in commodity prices did not have an effect on the CAD, with traders concentrating on comments from Finance Minister Flaherty. Emphasising the importance of a healthy currency range, the minister was accepting of the recent apprecation in the CAD. He also noted that the USDCAD could fall further in light of recent economic conditions. The USDCAD bucked the trend and rose to 0.9985 during the afternoon session. The Japanese Yen experienced a significant turn around in trade on friday with the currency rising to 82.07. After a disappointing sovereign rating downgrade in the previous session, traders used the opportunity to open new positions in the yen. Speculation that the government may be required to step up reform both on a fiscal and monetary basis helped boost the currency. An appreciating currency has also meant that corporate earnings have been influenced greatly, which has concerned the BOJ and economists.
