Weekly Market Summary

by Raymond Chatlani

On Monday, Asian stocks gave up early gains and fell as fears that the U.S. is slipping back into recession caused investors to dump riskier assets. Gold hit a new all time high of over $1,890 an ounce. Bank shares crashed despite a widespread rally across Europe's major stock markets as questions were raised about their ability to fund themselves. US markets rose modestly on expectations of the Feds introducing another quantitive easing program.

On Tuesday, Asian markets extended gains after the Chinese flash PMI from HSBC, designed to preview China's factory output before official data, showed the index edging up to 49.8 in August from July's final reading of 49.3. That left the index just below the 50-point mark which separates expansion from contraction, but HSBC itself believes a reading as low as 48.0 in China would still point to an annual growth of 12-13 percent in industrial output and 9 percent in GDP. For the fourth straight session, gold hit another new all time high at 1,911 an ounce at one point as investors continued to fret about the health of the global economy. European stocks rose as manufacturing activity in Germany was better than expected, rising to 52 in August, compared with estimates for a reading of 50.8. US stockmarkets rose amid better-than-expected global manufacturing data and expectations that the Federal Reserve Chairman Ben Bernanke will discuss additional support for the U.S. economy during a conference on Friday.

On Wednesday, Asian shares fell despite a sharp rally on Wall Street the previous night as Moody's downgraded Japan's credit rating to Aa3 from Aa2, citing weak growth prospects for the world's No. 3 economy, massive government debt and constant political uncertainty. European stockmarkets rocketed as the European Central Bank's weekly dollar funding operation was not used on Wednesday, calming fears that euro zone banks are being increasingly blacklisted by U.S. money market funds because of their exposure to the region's debt crisis. US markets turned higher as a larger-than-anticipated rise in orders for durable goods bolstered the view that, while sluggish, the economy is not headed into recession.

On Thursday, Asian shares rose cheered by gains on Wall Street and gold continued to struggle after running into a wall of profit-taking. European stockmarkets ended lower after another volatile trading session, as talk of an imminent ban on short-selling in Germany, later denied, swept through equity markets. . US markets fell on weakness in industrial and technology shares as Apple Inc fell 2 percent to $368.75 a day after co-founder Steve Jobs resigned as chief executive, keeping the Nasdaq negative. Adding to tech woes, Applied Materials Inc fell 3.6 percent to $10.94 after warning Wednesday that fourth-quarter revenue could fall as much as 30 percent on plummeting demand.

On Friday, Asian stockmarkets fell marginally on jittery trading as investors waited to see if Bernanke offered more support for the U.S. economy when he delivers a highly anticipated speech at a conference later today in Jackson Hole, Wyoming. European markets fell on concerns about the debt crisis. Wall Street rose sharply after Federal Reserve Chairman Ben Bernanke said the U.S. was headed for long-term economic growth.

This morning, Asian stocks rose after US Federal Reserve Chairman Ben Bernanke left the door open for further action to stimulate the economy and fight high unemployment.

Last week, global markets rose modestly with commodities rising sharply except for oil. European shares were mixed as some markets fell due to the ongoing Eurozone crisis. The bigger picture here is that US Federal Reserve chairman Bernanke appears to have enough confidence that the economy is not going to worsen and so he thinks there is no need for a QE3 at this time. Federal Reserve Chairman Ben Bernanke also left the door open to new stimulus to help the U.S. economy and reduce unemployment.

We expect this volatility and lack of direction in the markets to continue during September as traders and fund managers will still be on holiday. If Bernanke does launch QE3 as expected this Autumn, then markets should recover their present summer losses.