Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stockmarkets rose as investors reacted positively to the G20 statement that they would avoid competitive devaluations between their nations. European markets especially commodity stocks rose as the US Dollar fell on the back of the G20 statement. US stocks rose modestly as US existing home sales soared 10% in September.

On Tuesday, Asian markets were mixed making only small gains or losses. European stocks fell as European corporate earnings mostly left investors disappointed ahead of more releases from the U.S. and Asia. Disappointing earnings and a slightly stronger US Dollar sent US stocks lower but these recovered at the close and closed slightly positive.

On Wednesday, Asian indices fell as investors pared positions and took some profits on quantitive easing uncertainty as they wait for the outcome of the Federal Open market Committee meeting next week on 2-3 November and as South Korea's GDP slowed sharply to 0.7% in the third quarter from 1.4% in the second quarter of 2010. European stocks fell on lower commodity prices as doubts grew over the size of the next economic stimulus. US markets fell as investors questioned whether the Federal Reserve's expected plan to buy Treasury bonds might be as big as anticipated.

On Thursday, Asian stocks mostly rose modestly ahead of earnings from the region's major companies and amid uncertainty over the size of the U.S. Federal Reserve's bond-buying program aimed at stimulating the economy. European markets rose on strong corporate earnings and a weaker US Dollar. US stocks closed flat as investors dug through a raft of earnings reports that painted a mixed picture about the economy.

This morning, Asian markets sank amid weak Japanese factory production figures as investors trimmed bets ahead of a U.S. economic reports on gross domestic product, consumer sentiment and manufacturing and likely Federal Reserve stimulus measures. Japan's industrial production fell for the fourth straight month in September, underscoring the country's fragile recovery as factory output tumbled 1.9 percent from the previous month as makers of cars and electronic devices cut production, much worse than a 0.6 percent fall forecast by analysts. European markets were modestly up on a weaker US Dollar. US stocks were flat on reports that GDP grew 2% in the third quarter which is considered too low to create employment.

For the second week in a row, markets and commodities have fluctuated without any sense of direction although corporate earnings in the US, UK and EU have exceeded earning expectations. Investors are largely ignoring fundamentals of improving economies to drive stocks higher. Rather, investors are waiting for the FEDS announcement after their meeting on 2-3 November 2010 as to how large their programme of quantitive easing will be. If the amount of quantitive easing will not be up to expectations then this rally will probably be over as traders will book profits.