Weekly Market Summary

by Raymond Chatlani

On Monday, Asian developed stockmarkets fell while emerging markets rose and oil nursed losses after a massive earthquake in Japan sent investors scurrying to safe haven assets and raised concerns of falling demand for commodities. The Japanese quake hit European shares with insurers getting hammered. Us stockmarkets fell following world global markets.

On Tuesday, Japanese shares tumbled for a second day as the nuclear crisis created panic as dangerous levels of radiation leaking from a crippled nuclear plant forced Japan to order 140,000 people to seal themselves indoors after an explosion and a fire dramatically escalated the 4-day-old crisis spawned by a deadly tsunami. The Nikkei fell 17% over two days only. Other Asian markets dived also. European and US markets followed Japan's plunge.

Asian financial markets rallied on Wednesday, led by a nearly 6 percent surge in Japanese stocks, after a horrendous two-day sell-off on last week's killer earthquake and an unfolding nuclear crisis.
Other Asian stock markets also closed higher. European and US fell sharply following disappointing U.S. economic news and more worries about the nuclear crisis in Japan. The Commerce Department reported that new home construction fell to the second-lowest level on record in February, reflecting weak demand. Wholesale prices, meanwhile, rose last month by the most in nearly two years due to higher energy and food costs.

On Thursday, Asian stockmarkets fell after U.S. officials said the risk of a catastrophic radiation leak from an earthquake-crippled Japanese nuclear plant was rising. European and US markets rose as US factory output rose for the sixth straight month and US initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 385,000. The four-week moving average of unemployment claims -- a better measure of underlying trends - dropped 7,000 to 386,250, the lowest since mid-July 2008 and staying below the 400,000 level for a third straight week.

On Friday, Asian stockmarkets rose as the Yen tumbled after the Group of Seven agreed on rare joint intervention to curb the soaring currency and calm markets jittery over Japan's nuclear power plant crisis. European shares, led by industrials rose after the Group of Seven nations helped calm market nerves over the Japanese earthquake-tsunami disaster by intervening to restrain a soaring yen. US markets rose sharply as Wall Street welcomed reports of a cease-fire in Libya which reduced tensions in the region and a coordinated effort by industrialized nations to bring the Japanese yen down from historic highs.

Over the weekend, a coalition force backed by a United Nations mandate imposed a no fly zone over Libya and attacked Gadhafi's air defences. US, British and French military warplanes, warships and submarines fired cruise missiles to destroy Gadhafi's airplanes and communications equipment. The U.S. military said the bombardment so far — a rain of Tomahawk cruise missiles and precision bombs from American and European aircraft, including long-range stealth B-2 bombers — had succeeded in heavily degrading Gadhafi's air defenses. As of Sunday, members of the coalition included the U.S., Great Britain, France, Canada, Italy, Belgium and Qatar.

In Japan, while the operator of the overheated nuclear plant said two of the six reactor units were safely cooled down, pressure unexpectedly rose in a third unit's reactor, meaning plant operators may need to deliberately release radioactive steam.

Last week, markets got hammered with Japan falling 10% and other global markets falling around 3%. This will probably be temporary as economic data out of the US continues to improve.

In America, factories are producing more cars, computers and household appliances, and applications for unemployment benefits over the past four weeks are at the lowest point since summer 2008. Economic data released last Thursday suggest that March will be the second straight month of strong job growth. Still, rising prices for household necessities and trouble overseas could slow the U.S. economy in the coming months.
Also, manufacturing output has grown in all but four months since the recession ended in June 2009. And manufacturers have created 190,000 jobs over the past year, the highest 12-month total for that group since 1998. Last month alone factories added 33,000 net new jobs. Rising factory output supports more high-paying jobs.

Private companies added 222,000 jobs in February, the most in almost a year, and unemployment fell to 8.9 percent. The unemployment rate has fallen by nearly a full percentage point since December -- the steepest three-month decline since 1983.

Most economists don't expect the Federal reserve to take any steps to combat inflation, such as raising short-term interest rates, until next year. Overall, the Fed this week offered its most optimistic assessment of the economy since the recession ended, largely because of stronger job growth.

Though investors are entering next week’s markets after five volatile days of trading and they could encounter another bruising ride driven by fast-moving events in Japan, Libya and parts of the Middle East, we remain cautiously optimistic that this turmoil will prove to be temporary.