Weekly Market Summary

By Raymond Chatlani

On Monday, Asian indices were up after South Korea's exports grew faster than expected and China's manufacturing data confirmed that the economy was growing at a lesser pace which heightened expectations that the Chinese Authorities would now relax policy tightening measures. European stockmarkets also rose on strong manufacturing data, HSBC's reported doubling of profits and BNP Paribas profits which also exceeded forecasts. US markets also appreciated on news that the index of manufacturing activity for July was better than expected.

On Tuesday, Asian equities rose for a second day following the previous day's rally in European and US markets. EU and US indices fell on a report showing that US personal income and spending was flat in June and that pending sales on previously owned home fell to a record low.

On Wednesday Asian equities fell on US economic data. European indices were mixed while US markets rose on reports that the US added more workers in July than forecast and that the services sector is expanding.

On Thursday, Asian markets were mixed due to reports that the Chinese Government would stress test local banks. European and US stocks dropped on an unexpected rise in weekly US jobless claims which underscores a weakening economy. As expected, the Bank of England and the EU Central Bank kept base interest rates unchanged at 0.5% and 1% respectively.

On Friday, Asian stocks closed mixed as investors waited for the results of US non-farm payroll figures. European and US indices fell for a second straight day as private employers in the USA added a total of 71,000 only in July, far below the 200,000 jobs needed every month to reduce the unemployment rate.

A lot of mixed signals and markets were flat this week. The employment figures out of the US confirm that although the economy is growing, it is slowing down.

In previous weeks we have seen good earnings reports from companies which is due to cost cutting rather than an increase in sales. This weeks employment and jobless claims data confirm this. Until a clear trend emerges, the risks of getting back into this market are still elevated.

The markets will be driven next week by the results of the Federal Reserve Bank meeting on Tuesday. Investors should react depending on whether the FEDS do nothing or introduce new stimulatory policies.