Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stockmarkets closed mostly positive after Ireland yesterday applied for a bailout from the European Union and the International Monetary Fund to save its banks. This bailout is expected to be between 80 to 90 Billion Euros which is less than the Greek bailout earlier in May this year. European shares rose in the morning but fell into negative territory in the afternoon as investors waited to see the terms of Ireland's bailout. US indices closed mixed as a bailout for debt-soaked Ireland failed to allay fears of a wider euro zone crisis, prompting investors to seek safety in the U.S. dollar and Treasuries.

On Tuesday, Asian stockmarkets fell, following declines on Wall Street the previous day and after North Korean artillery fired dozens of shells onto a South Korean island near their disputed sea border, wounding several people, setting fire to buildings and prompting a return of fire by the South, Seoul's military and media reported. EU and US stocks, especially miners got hammered on Irish and Korean tensions.

Asian shares initially fell on Wednesday and the euro hovered near a two-month low to the dollar as regional stocks caught up with a sharp sell-off after North Korea's deadly shelling of a South Korean island and investors sought safety in the U.S. currency. However, Asian markets recovered at the close and were mostly in positive territory. European and US stocks gained on economic data as the US Government released a batch of reports on the economy. The government said first-time claims for unemployment fell 34,000 to 407,000 in the week ending Nov. 20 and that personal incomes rose 0.5 percent in October, slightly better than expected.

On Thursday, Asian markets were mostly higher in light trading as investors took heart from data showing an improving economic picture in the U.S. and signs that tensions had cooled at least temporarily on the Korean peninsula. European stocks rose in thin trade on last night's US data. US markets were closed for Thanksgiving.

This morning, Asian stockmarkets fell on worries about China tightening monetary policy to contain inflation, fresh artillery shots fired by North Korea on the disputed island amid warnings of war and fears that European contagion will spread to Portugal and Spain. Banks lead European markets down on the eurozone crisis with miners also losing ground on a strenghtening US dollar. US stocks fell on thin trade due to the long holiday Thanksgiving weekend.

A bad week for equities and commodities. Clearly, the Irish problem and fears that contagion will spread to Portugal and Spain, the uncertainty of when China will probably raise interest rates to control inflation and that North Korea has fired shells on a disputed South Korean island have all contributed to a strenghtening US Dollar against a weakening Euro this week and a flight to US treasuries. Also, trading has also been more volatile in the second half of this week due to US markets being closed on Thursday for the Thanksgiving holiday.

A bright spot this week was that first-time claims for unemployment fell significantly last week, incomes rose last month and consumer spending climbed for a fifth month in the USA. This raises hopes that shoppers will hit the malls in droves the day after Thanksgiving, the start of the holiday shopping season. These are fundamental signs that the US economy may be improving.

Will improving US data drive the markets forward or shall we continue to see this volatility due to the European debt crisis? Short term it is difficult to predict, but the USA is determined to devalue the US Dollar and we should see emerging markets and commodities eventually recover from this recent selloff.