Weeket Market Summary

by Raymond Chatlani

EU finance ministers on Sunday endorsed a bailout package of 85 billion euro to help Dublin cover bad bank debts and bridge a huge budget deficit, and outlined a permanent system to resolve the euro zone debt crisis in which investors could share the cost of any future default.

On Monday, Asian mostly rose on the Irish bailout news. European and US stocks fell sharply as concerns about the European debt crisis took the edge off a strong weekend of holiday sales in the USA. US shares recovered late in the session and closed modestly down.

On Tuesday, Asian markets fell as Chinese shares slid on fears of an interest rate hike and the European Union's bailout of Ireland failed to convince investors the continent's debt crisis has been contained. European indices fell as the spread between Spanish 10-year bond yields over those of Germany widened by 20 basis points to 297 basis points, while Italian 10-year spreads rose for a fourth day to 210 basis points. US stocks slid as continuing European debt woes and an 0.7% decline in the Standard & Poor's/Case-Shiller 20-city home price index offset a five month high in consumer confidence.

On Wednesday, gold rocketed to just below $1,400 an ounce with silver exceeding $28 an ounce. Asia markets rose broadly as sentiment was boosted by data showing China's factories revved up production in November with the official Chinese purchasing managers' index (PMI) rising to a seven-month high of 55.2. European indices rose calmed by indications that the European Central Bank could subtantianlly increase purchases of eurozone bonds and on stronger Chinese data. US stocks were sharply higher as upbeat U.S. and Chinese data lifted investor confidence about a global economic recovery. USA data showed an improvement in construction spending while manufacturing activity expanded for the 16th consecutive month.

On Thursday, Asian stock markets rose sharply after improved economic indicators powered big gains on Wall Street and worries eased about Europe's debt problems. European stocks rose on expectations that the ECB would signal action to fight a eurozone debt crisis. US stocks extended gains after data showed pending sales of existing homes unexpectedly surged in October.

This morning, Asian markets closed mixed on good US data and fears that China would raise interest rates. European and US indices were mixed as the US unemployment rate climbed to 9.8 percent in November from 9.6 percent, a seven-month high, as hiring slowed.

At the beginning of the week, markets continued to fall after last week's losses. In the past few days, markets and commodities recovered on improving US data, ECB intervention in the form of purchasing bonds and a statement that unlimited liquidity would be provided to Eurozone banks till the end of March 2011. Chinese data this week also reversed sentiment to a positive stance. Commodities, especially gold, silver and oil appreciated significantly.

It looks like the Korean and EU debt crisis are diminishing in investor's minds and they are focusing on improving US economic data.