Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stockmarkets were lifted by better than expected growth in U.S. jobs and a bounce back in commodity prices. European shares fell as Eurozone debt worries weighed as Standard & Poors cut its rating on Greece by two notches to B from BB-, citing the Mediterranean country's rising default risk. US indexes rose as investors weighed uncertainty about Greece's hefty debt load against a spate of deals news.

On Tuesday, Asian stocks gained after China reported record exports. As a result China's politically-sensitive trade surplus ballooned to $11.4 billion in April and exports hit a record monthly high, as Washington pressured Beijing for a stronger currency. European stockmarkets rose as sentiment towards Greece's debt predicament improved and on a buoyant start to Wall Street. U.S. stocks rose after strong Chinese trade data eased concerns over a slowdown in the world's second-largest economy and pointed to healthy global demand.

On Wednesday, Asian stockmarkets firmed on rising commodity prices which boosted energy and resource stocks, as investors largely shrugged off slightly stronger-than-expected inflation data from China. China's inflation eased in April to 5.3 percent and other data, including for industrial output and loans, suggested the world's second-biggest economy may be cooling and there was less need for further aggressive monetary tightening. European markets fell on a sharper rise in German inflation than expected and as the price of commodities dived. US stockmarkets fell as commodities slid.

On Thursday, Asian share markets tumbled after a second big sell-off in commodities in less than a week curbed investor appetite for riskier investments and boosted the U.S. dollar. European stockmarkets fell, joining a global sell-off after heavy losses in Asia and on Wall Street, as sliding commodity prices dented the resources sector. Sentiment was further rattled after China announced it would raise its bank reserve requirement ratio, stoking concerns about slower economic growth in the Asian powerhouse. U.S. stocks advanced in a volatile session, erasing early losses as a rebound in commodity prices kept the market churning higher.

On Friday, Asian stockmarkets rose as bargain hunting investors bought. European markets fell although data showed that Germany, Europe's largest economy, grew by a startling 1.5 percent in the first three months of the year, with France only paling a little in comparison, growing by 1.0 percent. US indices fell as investors continued to reduce investment in risky assets.

Last week, global markets and commodities continued to fall on Greek's resurfacing debt crisis, fears of high inflation in developing markets and concerns of slowing economic growth in the USA. As investors continued to flee into the US Dollar, commodities continued to sell off. Investors are divided as to the future direction of the markets.

Bullish investors see inflation as being strong and point out that first quarter earnings have been strong with almost three quarters of reporting companies beating Wall Street's estimates and that revenue strong has been sturdy. The bears point out that the Federal Reserve's $600 billion program to buy Treasury debt has helped investors divert funds to commodities and equities, creating a bubble in those assets, which is now starting to burst.

With the summer months ahead which is usually a slow time for the markets, we may now be entering a period where investors are paring their positions to take profits and re-enter the markets in the fall. Our view is that as long as interest rates remain below inflation, then we shall continue to see global equiities and commodities rise though there may be weakness over the summer months.