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.
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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.