Weekly Market Summary

by Raymond Chatlani

On Monday, Global markets continued to fall on fears that a Greek default is imminent. Greece reported that the deficit for this year would be 8.5 percent which is above the expected target of 7.6 percent. it was explained that this was due to a 5.5 percent contraction in GDP.

On Tuesday, Asian stockmarkets continued their falls on growing doubts over Greece's ability to avoid default that fuelled fears of global financial turmoil and recession. European markets fell on increased worries about a major banking crisis in Europe and expectations that Greece would default soon. A late rally in U.S. stocks pulled Wall Street out of bear market territory on Tuesday, and the euro rose versus the dollar after Federal Reserve Chairman Ben Bernanke promised more economic stimulus if needed.

On Wednesday, Asian markets trimmed earlier gains as traders wait to see if Bernanke will definitely provide economic stimulus. U.S. and European stock markets traded higher amid reports monetary officials in Europe are working to shore up the weak European banking sector, in case Greece should actually default on its debt obligations in the near term.

On Thursday, Asian stockmarkets followed global stocks higher, buoyed by a recovery across a broad range of assets on optimism over Europe's efforts to aid the region's financial sector and U.S. data suggesting the economy could avoid recession. European and US markets rose as Europe moved closer to pumping aid to the region's troubled banks and U.S. jobless benefit claims rose less than expected last week. The European Central Bank (ECB) announced aggressive liquidity measures on Thursday, throwing a lifeline to lenders who have seen wholesale funding drying up as market confidence ebbed. The European Central Bank said it was ready to buy bonds to provide longer-term cheap money for European lenders in need of funding.


On Friday, Asian markets rose for a third day following the ECB's agressive moves to provide liquidity to financial institutions. European stockmarkets rose on good US jobs data. Wall street fell after a ratings downgrades of Spain and Italy buffeted markets.

This morning, Asian stockmarkets closed mostly higher except for China and Hong Kong as on Sunday, French President Sarkozy and German Chancellor Merkel agreed a package of measures to help stabilise the eurozone by the end of the month.

Last week global markets and commodities rose modestly supported by assurances from the Federal Reserve that more economic stimulus would be provided if needed, promises by EU officials that European banks would be recapitalized to help deal with a potential debt default by Greece and yesterday's agreement between France and Germany to allow additional measures to stabilise the Eurozone by the end of the month.

As in previous weeks, we are still only seeing rhetoric by global officials without concrete action being taken. While short term action by the ECB to provide liquidity will ease the anxiety of the market for now, this present volatility is expected to continue until additional monetary policy measures are actually implemented later on this month.