Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stockmarkets fell as Japan's core machinery orders fell 2.3 percent from a month earlier in February, with the bigger-than-expected fall during pre-quake conditions raising concerns about the severity of the March 11 quake's impact in the months to come, as investors continued to worry about soaring oil prices although investors ignored news that China said it had posted its first quarterly trade deficit in seven years, despite a narrow surplus in March, as rising commodity prices pushed manufacturers' costs higher. European and US markets mostly fell on investor concerns over the impact higher raw material costs as well the effects of Japan's earthquake on the earnings season. Adding to the worries in the United States was news after the bell that Alcoa Inc revenue missed forecasts, sending its shares down 3.6 percent in post-market trade.

On Tuesday, Asian markets fell after Japan raised the severity of its nuclear crisis, putting it on par with the 1986 Chernobyl disaster. Japan's Nikkei tumbled 2.1 percent on worries about the impact of the March 11 earthquake and tsunami on company results. European and US stockmarkets fell on worries about Japan and first quarter earnings. Commodities ended sharply lower on Tuesday, posting their steepest daily fall in a month after more bearish comments on oil from Goldman Sachs triggered a second day of widespread selling. Oil closed down $3 a barrel in both London and New York after Goldman, a long-time commodities bull, said prices had gotten ahead of fundamentals. Warnings from the International Energy Agency (IEA) and OPEC that high prices would erode global demand also weighed on the market.

On Wednesday, Asian stockmarkets rose with investors looking for fresh opportunities to bet on risky assets after a sharp drop in oil the previous day caused an unwinding of positions. European bourses recovered from Tuesday's sell off on spectular results from JP Morgan. US markets ended a choppy session little changed.

On Thursday, Asian markets fell amid concerns that rising food and fuel costs could undermine consumer demand, hurting economic growth and company profits, although Singapore's gross domestic product grew 23.5 percent quarter-on-quarter on an seasonally-adjusted annualised basis, blowing past even the most bullish forecast in a Reuters poll. European stockmarkets fell as traders reacted to a raft of company news and the lingering eurozone debt crisis. US indices were flat as jobless claims rose by 27,000 to 412,000 in the week to 9 April, a bigger rise than had been expected. Producer prices also rose more than expected. They were up by 0.3% in March, the biggest year-on year increase since August 2009.

On Friday, Asian stockmarkets fell as concern over Chinese inflation rattled the markets. China's economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008. China’s consumer prices rose 5.4 percent from a year earlier, the statistics bureau said at a briefing in Beijing today. The median forecasts in Bloomberg News surveys of economists were for growth of 9.4 percent and inflation of 5.2 percent. Industrial output increased 14.8 percent year-on-year, exceeding estimates of 14 percent. Gold briefly jumped to another record high of $1,479 an ounce after the dollar fell to its lowest since late 2009 against a basket of major currencies, taking silver to a 31-year high of over $42 an ounce, while inflation pressures in China also helped lift bullion's appeal.
China’s consumer prices rose 5.4 percent from a year earlier, the statistics bureau said at a briefing in Beijing today. The median forecasts in Bloomberg News surveys of economists were for growth of 9.4 percent and inflation of 5.2 percent. Industrial output increased 14.8 percent year-on-year, exceeding estimates of 14 percent. European markets and the Dow and S&P rose as encouraging economic indicators offset some disappointing corporate results, though weakness in Google pressured the Nasdaq. A government report showed underlying inflation pressures remained contained in March, while a survey showed April consumer sentiment rose more than expected.


Last week, equity markets mostly fell with commodity prices flat. The only exceptions were gold and silver which hit new highs as inflation concerns stoked demand. In fact, this morning Gold hit a new high of $1,485 an ounce with silver breeching $43 an ounce.

Although equity markets fell, economic data from the US was positive as a government report showed underlying inflation pressures remained contained in March, while a survey showed April consumer sentiment rose more than expected as the preliminary index of consumer sentiment advanced to 69.6 from 67.5 the prior month and U.S. industrial production at factories rose 0.8 percent in March, the fifth straight gain. Last week's fall in stockmarkets can be attributed to inflation concerns with European debt problems again in focus as Moody's cut Ireland's sovereign rating by two notches to Baa3 and left the outlook negative. Moody's cited an expected decline of the Irish government's financial strength and the country's weaker economic growth outlook as reasons for the downgrade.

This morning, a Greek newspaper report that the government had asked the International Monetary Fund and European Union to start discussions on a restructuring of its debt will not help the markets this week. A Greek finance ministry source said the report was not true. We are in earnings season and this could act as a catalyst to lift the markets should earnings surprise.