Weekly Market Summary

By Raymond Chatlani

This morning, Asian stockmarkets tumbled on Friday's poor US jobs report and today's emergency ECB meeting over the debt crisis. European shares dropped as mounting signs the region's debt crisis was spreading to Italy hammered euro zone peripheral stocks, taking a key stockmarket index to a two-week low and below an important support level. Shares of financial institutions were among the worst hit. Wall Street dived as renewed jitters about Europe's debt crisis and the global economy overshadowed the start of earnings season.

On Tuesday, Asian stockmarkets fell again on Europe's spreading debt crisis as Italian Government bond prices continued to fall. European indices fell for a third day as moves by officials to stem the European debt crisis failed to allay concerns that the risk was spreading to Italy and Spain. US markets fell as the U.S. trade gap widened sharply in May to its highest level in nearly three years as surging oil prices helped push imports to a near record and exports fell slightly from April's all-time high and as Ireland's beleaguered economy suffered another blow as Moody's cut its credit rating to junk status on fears that it will need further bail-outs.The country joins Portugal and Greece to become the third euro-area nation to be reduced to non-investment grade.

On Wednesday, Asian markets rebounded higher as China's rapid economic growth slowed in the latest quarter to a still robust 9.5pc, easing fears of an abrupt slowdown and giving Beijing room to tighten controls to fight surging inflation. Economic growth slowed slightly from 9.7pc in the January-March quarter following repeated interest rate rises and other controls, data showed on Wednesday. Factory output rebounded and retail sales grew by double digits. European stockmarkets were lifted by upbeat Chinese growth data. Wall Street closed higher after Fed Chairman Ben Bernanke suggested the Fed would consider additional measures to support the economy if the outlook gets worse, but the market is likely to get hit in the coming session after Moody's said it could cut the United States' prized triple-A credit rating. Gold hit record highs on safe-haven buying linked to the European debt crisis and a dollar weakened by hints of more economic stimulus from the Federal Reserve, while supply concerns drove most other commodities higher.


On Thursday, Asian stockmarkets fell modestly on fears that America ratings would be cut from AAA. Spot gold hit a record high $1,594 an ounce, buoyed by a sharp drop in the dollar after Moody's warned the U.S. may lose its top credit rating, the possibility of more Federal Reserve stimulus and Europe's deepening debt crisis. Both European and US markets fell on fears of the spreading Eurozone debt crisis and possible cut to the US credit rating although U.S. retail sales unexpectedly rose in June while weekly jobless claims dropped by a surprisingly large 22,000 to 405,000..

On Friday, Asian stockmarkets closed mixed although ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon. This is the second ratings agency that may cut the US credit rating. European markets closed lower as eight of 90 European banks failed the stress test. Wall Street advanced on strong corporate results from Citigroup and Google which offset a rash of weak U.S. economic data. Most major commodities rose on Friday, reversing the previous session's losses, as forecasts for hot weather drove up energy and agriculture prices and mounting fears about debt defaults lured investors into gold.

This morning, Asian markets fell modestly on worries about Europe's banking woes and debt problems in the U.S.

Last week, global markets fell as the ongoing debt crises in the U.S. and the euro zone kept investors from adding to their risky assets. The results of stress tests on European banks that were released after the close of trading Friday overshadowed the start of this week's trading in Asia. The results did little to reassure investor confidence in the continent's shaky financial sector, revealing that eight of 90 European banks flunked tests aimed at revealing how they would fare in another recession. Another 16 barely passed.
Investors are also unsettled by the inability of U.S. politicians to work out a deal to avoid a debt default before a deadline that is just two weeks away.

With policymakers on both sides of the Atlantic offering no clear solutions to the markets on their respective debt problems, risk-averse investors are expected to continue piling up perceived safe-haven instruments like gold which hit a record high of $ 1,598 an ounce this morning and bonds.

In the coming days there is likely to be volatility as the market grapples with these major issues. Earnings reports from US companies this week, even if positive may not lift the markets as investors focus on sovereign debt issues while commodities may continue to gain.