The fall in the value of sterling over the last
month has been breathtaking.
Over four weeks in August it fell around 9% against the US dollar and the Japanese yen.
The tumble has been sparked largely by the UK's gross domestic product growth falling to zero in the second quarter and an increasingly gloomy outlook from senior officials in the Bank of England and in government itself.
All that adds up to a mountain of pressure to lower interest rates.
This has a direct impact on the Global 30 index which is priced in sterling. As a result, the top performances are, in sterling terms only, American and Japanese.
By simply looking at the numbers (see accompanying box) you would have imagined that the global economic recovery is rocketing ahead.
Not quite yet. Proctor and Gamble's runaway gain of 15.7% translates in dollar terms into a 7% gain.
Likewise Tokyo Electric is up less than 5% in yen terms. Not bad performances, but more than anything it really emphasises the markets' taste for solid defensive stocks.
Look at the other end of the scale and you get a more painful insight into the distorting influence of currencies.
Banking group Mitsubishi UFJ appears to have fallen 6.5%, but this is not so. In yen terms the fall is over 13%.
The lender had a bigger than expected drop of 66% in quarterly profits and has increased its bid for Union Bank of California to $3.5bn at a time when bank take-overs are being viewed with extreme caution.
However, the bid highlights an increasing willingness among Japanese institutions to get involved in foreign ventures. The value of overseas acquisitions by Japanese companies is already up by 73% on the whole of last year.
High Street
Strip out the currencies and the best performance comes from GlaxoSmithkline, up 10.3%. Both it and Vodafone, up 3.7%, have been singled out by a number of UK newspaper tipsters as offering investors a haven with high yields and new chief executives Andrew Witty and Vittorio Colao. Braking hard?
Anyone who hopes that we can avoid a full global recession is looking East, where China and India still stand as the last bastions of the boom.As if to confirm this, Industrial & Commercial Bank of China last month declared itself to be the biggest and most profitable bank in the world.
Citibank, the one-time holder of this particular title, battered by its sub-prime follies, asked its employees if they could help cut costs by using the colour photocopiers a little less.
Even so, China's future may not be that secure.
Justin Urquhart-Stuart, director of Seven Investment Management said: "We are getting indications that China is slowing.
"A slow down in China will mean growth going from 11% to 8% but that will be like going from 70 miles per hour to 40 miles per hour in car with no seat belts.
"Then China will be faced with the question of over capacity and whether to cut it, or dump goods overseas - and that will effect its relations with the US."
Expansion plans
Asia is where the commodity companies have staked their futures. Quarter by quarter they deliver new records but similarly they find it ever harder to keep their share prices up.
BHP was up just 3.7% in sterling terms despite reporting a 20% increase in profits. Even Xstrata's $9bn bid for Lonmin to get hold of its platinum assets failed to revive the sector. Xstrata's shares are down 20% in August.
Yet commodity prices are slipping downwards: copper and nickel are both trading 7% lower on the month.
BHP and Xstrata are actually closing nickel facilities because they have become unprofitable; and of course oil has been steadily falling, despite the crisis in Georgia which could well have threatened Caspian Sea pipe lines, and the threat of Hurricane Gustav in the Gulf of Mexico.
Arcelor's share price should also have been higher.
The world's largest steel maker has been making several acquisitions a month to feed its growth, and is expected to continue its aggressive purchases of iron ore and coking coal resources worldwide.
Its target is to be 75% self-sufficient in iron ore by 2012, from 45 percent currently, thus, it hopes, wresting independence from the miners. But its shares ended the month down 9.7% in euros-terms and down 3.7% in sterling.
All these companies may protest that Asia will see them through the hard times, but the markets need a lot more convincing.
The tumble has been sparked largely by the UK's gross domestic product growth falling to zero in the second quarter and an increasingly gloomy outlook from senior officials in the Bank of England and in government itself.
All that adds up to a mountain of pressure to lower interest rates.
This has a direct impact on the Global 30 index which is priced in sterling. As a result, the top performances are, in sterling terms only, American and Japanese.
By simply looking at the numbers (see accompanying box) you would have imagined that the global economic recovery is rocketing ahead.
Not quite yet. Proctor and Gamble's runaway gain of 15.7% translates in dollar terms into a 7% gain.
Likewise Tokyo Electric is up less than 5% in yen terms. Not bad performances, but more than anything it really emphasises the markets' taste for solid defensive stocks.
Look at the other end of the scale and you get a more painful insight into the distorting influence of currencies.
Banking group Mitsubishi UFJ appears to have fallen 6.5%, but this is not so. In yen terms the fall is over 13%.
The lender had a bigger than expected drop of 66% in quarterly profits and has increased its bid for Union Bank of California to $3.5bn at a time when bank take-overs are being viewed with extreme caution.
However, the bid highlights an increasing willingness among Japanese institutions to get involved in foreign ventures. The value of overseas acquisitions by Japanese companies is already up by 73% on the whole of last year.
High Street
Strip out the currencies and the best performance comes from GlaxoSmithkline, up 10.3%. Both it and Vodafone, up 3.7%, have been singled out by a number of UK newspaper tipsters as offering investors a haven with high yields and new chief executives Andrew Witty and Vittorio Colao. Braking hard?
Anyone who hopes that we can avoid a full global recession is looking East, where China and India still stand as the last bastions of the boom.As if to confirm this, Industrial & Commercial Bank of China last month declared itself to be the biggest and most profitable bank in the world.
Citibank, the one-time holder of this particular title, battered by its sub-prime follies, asked its employees if they could help cut costs by using the colour photocopiers a little less.
Even so, China's future may not be that secure.
Justin Urquhart-Stuart, director of Seven Investment Management said: "We are getting indications that China is slowing.
"A slow down in China will mean growth going from 11% to 8% but that will be like going from 70 miles per hour to 40 miles per hour in car with no seat belts.
"Then China will be faced with the question of over capacity and whether to cut it, or dump goods overseas - and that will effect its relations with the US."
Expansion plans
Asia is where the commodity companies have staked their futures. Quarter by quarter they deliver new records but similarly they find it ever harder to keep their share prices up.
BHP was up just 3.7% in sterling terms despite reporting a 20% increase in profits. Even Xstrata's $9bn bid for Lonmin to get hold of its platinum assets failed to revive the sector. Xstrata's shares are down 20% in August.
Yet commodity prices are slipping downwards: copper and nickel are both trading 7% lower on the month.
BHP and Xstrata are actually closing nickel facilities because they have become unprofitable; and of course oil has been steadily falling, despite the crisis in Georgia which could well have threatened Caspian Sea pipe lines, and the threat of Hurricane Gustav in the Gulf of Mexico.
Arcelor's share price should also have been higher.
The world's largest steel maker has been making several acquisitions a month to feed its growth, and is expected to continue its aggressive purchases of iron ore and coking coal resources worldwide.
Its target is to be 75% self-sufficient in iron ore by 2012, from 45 percent currently, thus, it hopes, wresting independence from the miners. But its shares ended the month down 9.7% in euros-terms and down 3.7% in sterling.
All these companies may protest that Asia will see them through the hard times, but the markets need a lot more convincing.
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