by Raymond Chatlani
On Monday, Asian stockmarkets with investors still nervous despite the formation of a new Greek unity government intent on avoiding imminent debt default. European markets fell as concerns shifted to Italy and whether Rome can avoid being dragged further into the euro zone debt crisis as Italian bond yields spiked to a record. Wall Street rose as European finance officials agreed to release the next slice of bailout money to Greece as long as leaders of the parties agree in writing to carry out austerity measures required by international lenders.
On Tuesday, Asian markets wiped earlier gains and fell, weighed by concerns that surging bond yields could stifle debt-ridden Italy's fund raising ability and throw the euro zone deeper into financial turmoil, while Greece struggled to pick a new leader. European stockmarkets and Wall Street rose on Italian reform hopes as Italian Prime Minister Silvio Berlusconi's resignation gave hope for a clearer path to solving the euro zone debt crisis.
On Wednesday, Asian stockmarkets rose bolstered by easing inflation in China and the euro steadied after Italian Prime Minister Silvio Berlusconi said he would resign after parliament approves a budget law that includes reforms demanded by Europe, raising hopes the debt-ridden country would proceed with reforms to contain the euro zone's sovereign debt crisis from spreading. China's annual inflation rate eased to 5.5 percent in October from 6.1 percent in September for a third straight month of decline from July's three-year peak and Premier Wen Jiabao said prices had fallen further since then. Chinese producer prices rose 5 percent in the year through October, down from a 6.5 percent rise in the year to September. European markets slumped on worries that Italy is too big to bail-out as italian bond yields surged to over 7 percent which is considered to be unsustainable. US indices fell sharply as the Eurozone debt crisis escalated.
On Thursday, Asian markets fell after soaring Italian borrowing costs stoked fears that the euro zone's third biggest economy will be forced to seek a bailout, overwhelming the bloc's finances and raising the risk of a break-up of the currency area. Most European stockmarkets fell although there was a pullback in Italian bond yields below 7 percent to 6.9 percent. Strategists said further European Central Bank buying of Italian bonds helped push down yields. Wall street rose on Italy's successful bond auction and the appointment of a new leader in Greece. Lucas Papademos, a respected former vice-president of the European Central Bank, was appointed as the new Greek interim prime minister.
On Friday, Asian stockmarkets rebounded modestly after brighter corporate news lifted U.S. stocks and debt-ladened Italy was able to fund itself at a bond auction and the naming of a new leader in Greece. European indices and US markets rose following news that the Italian parliament may well vote this same weekend on an austerity bill and that a new government may even be announced as early as this next Sunday. In fact, the country's Senate has just approved that piece of legislation and tomorrow will come the turn of the lower house.
This morning, Asian stockmarkets and the euro rose on Monday on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone.
Last week, global equities and commodities fell throughout the week but recovered on Friday. The markets were very volatile as the Italian and Greek governments fell and havre now been replaced with temporary coalition governments who are expected to pass the austerity measures demanded by the EU for aid to continue. In fact, Italian 10-year bond yields soared above 7 percent last week to levels seen as unsustainable. Borrowing costs of more than 7 percent have previously driven Greece, Ireland and Portugal to seek bailouts.
Investors expect the leading European benchmark indexes to rise today, extending the previous session's rally as investors bet new leaders in Italy and Greece will speed up reforms to tackle the two countries' debt problems.
Following Italian Prime Minister Silvio Berlusconi's resignation, the country's president Giorgio Napolitano asked former European Commissioner Mario Monti on Sunday to form a government to restore market confidence, and Monday's bond auction will be seen as an initial judgment on his leadership. Italy is issuing a Euro 3 Billion five year bond today which will probably be fully taken up but at rates which are expected to be above six percent.
In Greece, the new Prime Minister Lucas Papademos -- a former central banker who oversaw his country's entry to the euro zone in 2002 -- will have to win Wednesday's confidence vote in his cabinet before meeting euro zone finance ministers in Brussels on Thursday, state television reported.
The markets should continue to be volatile this week as we wait the outcome of Italian and Greek actions
Monday, November 14, 2011
Tuesday, November 8, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, Asian stockmarkets fell as the dollar spiked to a three-month high against the yen following Japan's intervention, prompting investors to book profits after last week's rally. European and US markets also fell after the Japanese government intervened overnight to cap a rising yen and as doubts grew about a deal to tackle the European debt crisis.
.
On Tuesday, Asian markets fell on renewed worries about a slow progress in resolving the euro zone's debt crisis and a firmer dollar dampened investor appetite for risk. Also, China's official purchasing managers' index (PMI) fell to 50.4 in October from 51.2 in September, countering expectations for a rise. The National Bureau of Statistics blamed the drop on weak European and U.S. economies. European and US stockmarkets fell heavily on worries that a planned Greek referendum could scuttle a plan to resolve Europe's debt crisis.
On Thursday, Asian shares, the euro, commodities and the Australian dollar all fell as fears that Europe's debt crisis could unleash financial chaos prompted investors to shed riskier assets in favour of the relative safety of the dollar. European and US stockmarkets rose as Greece's government backed away from a proposed referendum on staying in the euro and a rate cut from the European Central Bank raised hopes for an easing of the region's debt crisis. The ECB cut the base rate by 0.25% to 1.25%.
On Friday, Asian stockmarkets rose and the euro steadied on hopes that Greece will abandon a proposed referendum over a euro-zone bailout but investors remained cautious over a confidence vote later in the day in the Greek parliament. European and US markets fell as richer nations appeared to back away from a European Union plan to broaden funding for a euro zone bailout fund. Also, Italian bond yields spiked higher hitting record highs of around 6.4 percent, expanding the spread of Italian 10-year yields over Bunds to a new lifetime high.
This morning, Asian stockmarkets with investors still nervous despite the formation of a new Greek unity government intent on avoiding imminent debt default.
Last week, global equities and commodities fell except for gold and oil which appreciated slightly as concerns grew over the details of a coalition deal by Greece and Italy's rising borrowing costs. The market is still filled with too many uncertainties for prices to stabilise. The rollercoaster movement of base metal prices is a sign of directionless trading. Investors are waiting to see what happens next with the euro zone crisis and China's credit situation.
Greek Prime Minister George Papandreou and opposition leader Antonis Samaras agreed on a new coalition government to approve the bailout plan, which requires painful fiscal reform, before elections. People are waiting for the situation to play out in Europe. Right now they are unwilling to put too many bets in either equities or commodities as investors remain unsure whether Greece will be able to work itself out of a debt crisis despite a weekend deal by the country's leaders aimed at implementing a controversial austerity program.
Also, a critical Italian parliament vote on Tuesday to debate austerity cuts has become a test of Prime Minister Berlusconi's government, with the opposition also preparing a motion of no confidence in the leader. The uncertainty in Rome eclipsed a political cross-party deal in Greece to approve the terms of its international bailout, although it was still short on detail.
The Greek debt crisis and the political uncertainty in Italy will continue to drive markets this week.
On Monday, Asian stockmarkets fell as the dollar spiked to a three-month high against the yen following Japan's intervention, prompting investors to book profits after last week's rally. European and US markets also fell after the Japanese government intervened overnight to cap a rising yen and as doubts grew about a deal to tackle the European debt crisis.
.
On Tuesday, Asian markets fell on renewed worries about a slow progress in resolving the euro zone's debt crisis and a firmer dollar dampened investor appetite for risk. Also, China's official purchasing managers' index (PMI) fell to 50.4 in October from 51.2 in September, countering expectations for a rise. The National Bureau of Statistics blamed the drop on weak European and U.S. economies. European and US stockmarkets fell heavily on worries that a planned Greek referendum could scuttle a plan to resolve Europe's debt crisis.
On Thursday, Asian shares, the euro, commodities and the Australian dollar all fell as fears that Europe's debt crisis could unleash financial chaos prompted investors to shed riskier assets in favour of the relative safety of the dollar. European and US stockmarkets rose as Greece's government backed away from a proposed referendum on staying in the euro and a rate cut from the European Central Bank raised hopes for an easing of the region's debt crisis. The ECB cut the base rate by 0.25% to 1.25%.
On Friday, Asian stockmarkets rose and the euro steadied on hopes that Greece will abandon a proposed referendum over a euro-zone bailout but investors remained cautious over a confidence vote later in the day in the Greek parliament. European and US markets fell as richer nations appeared to back away from a European Union plan to broaden funding for a euro zone bailout fund. Also, Italian bond yields spiked higher hitting record highs of around 6.4 percent, expanding the spread of Italian 10-year yields over Bunds to a new lifetime high.
This morning, Asian stockmarkets with investors still nervous despite the formation of a new Greek unity government intent on avoiding imminent debt default.
Last week, global equities and commodities fell except for gold and oil which appreciated slightly as concerns grew over the details of a coalition deal by Greece and Italy's rising borrowing costs. The market is still filled with too many uncertainties for prices to stabilise. The rollercoaster movement of base metal prices is a sign of directionless trading. Investors are waiting to see what happens next with the euro zone crisis and China's credit situation.
Greek Prime Minister George Papandreou and opposition leader Antonis Samaras agreed on a new coalition government to approve the bailout plan, which requires painful fiscal reform, before elections. People are waiting for the situation to play out in Europe. Right now they are unwilling to put too many bets in either equities or commodities as investors remain unsure whether Greece will be able to work itself out of a debt crisis despite a weekend deal by the country's leaders aimed at implementing a controversial austerity program.
Also, a critical Italian parliament vote on Tuesday to debate austerity cuts has become a test of Prime Minister Berlusconi's government, with the opposition also preparing a motion of no confidence in the leader. The uncertainty in Rome eclipsed a political cross-party deal in Greece to approve the terms of its international bailout, although it was still short on detail.
The Greek debt crisis and the political uncertainty in Italy will continue to drive markets this week.
Subscribe to:
Posts (Atom)
