Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stockmarkets fell after China’s central bank raised banks' reserve requirements ratio by 0.5 percentage points on Friday. China's Shanghai Composite Index lost 3 percent as property shares were hit on speculation that a property tax would be imposed. European markets fell as hopes of swift action from policymakers to boost the euro zone's rescue fund faded ahead of a meeting of finance ministers.

US markets were closed for Martin Luther King public holiday.

On Tuesday. Asian markets closed mixed but technology plays outperformed despite news the Apple Chief Executive Steve Jobs would take medical leave for the third time since 2004. European stocks rose as euro zone finance ministers inched towards improving a rescue fund and investor confidence grew in Germany. US indices rose on strong corporate earnings especially in the tech sector as both Apple and IBM reported improved earnings.

On Wednesday, Asian stockmarkets rose led by sectors most sensitive to the economic growth cycle ahead of U.S. earnings. European markets fell as mining and banks stocks were sold, though market players still see the upcoming European earnings season as a positive catalyst that should propel the market higher. US stocks fell on poor US housing data and as Goldman Sachs quarterly report showed that earnings fell 53 percent.

On Thursday, Asian markets retreated due to disappointing US corporate earnings and on profit taking and on news that Chinese GDP rose to 9.8 percent in the fourth quarter of 2010, defying expectations for a slowdown to 9.2 percent which indicates that Beijing still needs to work at combating price pressures, with inflation remaining stubbornly high. European and US stockmarkets fell although existing US home sales soared 12.3 percent year on year as global markets worried about high Chinese inflation.

This morning, Asian stockmarkets fell on fears of further Chinese tightening. European markets rose on good corporate results. US stocks rose as Google and General Electric reported strong quarterly results.

This week global equities and commodity prices fell after robust Chinese economic growth prompted fears the world's second-largest economy would try to choke off excessive demand that is fueling inflation, although European and US corporate earnings have been strong. We are probably going to enter a period of consolidation where markets may continue to fall for a while until inflation fears go away. We still expect both commodity and equity markets to perform this year due to the large amounts of liquidity that is being pumped into the global economy by various governments.