Analysis

	Global Financial Market – overview 06.18.2008.

 
The referendum in Ireland has led to the collapse of the Lisbon agreement, which was reflected in the market quotes for euro and share indices in Europe. The decrease on the European floors has started even earlier – in the last decade of May. The German DAX is trading at around 6570 points, and the British FTSE – at 5780 points
The American Dow Jones index is also trading within the bear channel at 12160 points.
Going down to critical threshold is feasible, and if the 11700-12000 ceiling is broken throw, we will be looking into a bear market.
 This scenario is supported by high levels of inflations throughout the world, threatening to absorb the economic growth. The leading Central banks are faced with the problem of whether or not to increase the rates in order to combat inflation, which would slow down the economic development that favors lower rates. This would in turn increase the already growing inflation.
The increase in gas and consumer basket prices makes it necessary for earned income to increase as well, and the vicious circle is closed; hopes rest in the resourcefulness of the statistics services that may calm the market players for a short period of time.
 Oil prices continue to grow rapidly, the 140 per barrel level has been holding up, but for how long? Despite the attempts to increase extraction, the demand remains unsatisfied even with a high markup the current gas prices, which correspond with the ongoing situation in which the physical amount of money exceeds the amount of exhaustible resources; this is the only possible scenario. According to some data, the Persian Gulf countries have crossed over the point of maximum oil extraction as of last year, and now costly technologies must be used to satisfy the market. Such technologies can lead to rapid depletion of the resources, making the main oil resources less accessible.
 On the one hand the process of inflation was brought on by the emission (new bills issued), and on the other hand the increase of oil prices is justified and is far from reaching its ceiling. The two processed put together further stimulate each other, and talks about the blowing of the “oil bubble” are premature.
 
Gold is trading at USD 890 per troy ounce, silver - at USD 17.35. Both precious metals are trading in the side price band