Oil at record high - Euro at record high - weak dollar so Fed is ready to cut rates, soften the blow and extend the misery
October West Texas crude rose to close at $78.23 a barrel today, marking the highest closing level ever for the front-month contract traded on the New York Mercantile Exchange.
OPEC has agreed to raise actual production levels by 500,000 barrels per day and lift the cartel's quota to 27.2 million barrels per day as of Nov. 1. There is widespread scepticism that OPEC can in fact in crease output even if they wanted to.
The dollar closed today 1.38395 to the Euro, up 0.21% near to record high of 1.38520.
This dollar weakness reflects the market anticipation that the Federal Reserve to cut rates on or before they meet on September 18th by up to 50 basis points from 5.25%. Last week's surprise US jobs data (Employers cut 4,000 jobs last month) is also weakening sentiment for the dollar.
The FTSE 100 closed up 146.6 points at 6,280.7, the biggest one-day percentage rise since Aug. 17 when the U.S. Federal Reserve cut its discount rate in an effort to calm panicky investors. In the previous two sessions, the UK benchmark index had lost more than 2.8 %.
(Fortune Magazine) -- "Credit crises have always been painful and unpredictable. The current one is particularly hair-raising because it's occurring amid the first truly global bubble in asset pricing. It is also accompanied by a plethora of new and ingenious financial instruments. These are designed overtly to spread risk around and to sell fee-bearing products that are in great demand. Inadvertently (to be generous), they have been constructed to hide risk and confuse buyers."
Other European markets also finished higher today.