by Raymond Chatlani
On Monday, Asian markets fell on Friday's disappointing US jobs data. European stockmarkets plunged as risk aversion and ongoing concerns about the eurozone debt crisis weighted on market sentiment. Wall Street was closed for the Labour day holiday.
On Tuesday, Asian stockmarkets fell amid fears that Europe's sovereign debt troubles are worsening and could trigger a second full-blown banking crisis after European stocks tumbled 4 percent on Monday, with financial shares falling to their lowest in more than 2 years. European markets continued to fall amid doubts about the will in Italy and Greece to push through austerity measures demanded by their partners, and hardening opposition to further aid in the bloc's paymaster Germany. US markets fell as they caught up with the markets after being closed yesterday due to a holiday in the USA.
On Wednesday, Asian stockmarkets rose on bargain hunting as value driven investors bought equities. European markets rose after a German court ruled against blocking bailout packages. Germany's Constitutional Court rejected a series of lawsuits aimed at blocking Germany's participation in bailout packages for Greece and other euro zone countries, but said parliament must have a bigger say in future rescues. Wall Street rose on relief that the bailout could continue in Europe.
On Thursday, Asian markets closed mixed as investors waited for statements from the ECB and US FEDS chairman Bernanke on anticipation that some form of quantitive easing would be announced. European stockmarkets rose as the ECB held rates at 1.5 percent. US indexes fell as investors were disappointed that while Bernanke did state that the FEDS would do everything to aid economic growth and employment, there was no indication as to what monetary tools would be used to support economic growth. Gold recovered after falling 3 percent the previous day as President Obama announced a $447 billion jobs plan to spur job growth, a mix of tax cuts and new spending. This is bullish for gold as more money is expected to be printed to support this plan.
On Friday, Asian stockmarkets closed mixed as traders weighed news China's inflation moderated slightly against disappointment that Fed chief Ben Bernanke offered no immediate support for the ailing U.S. economy. European and US markets fell as a jobs proposal by President Barack Obama did little to reassure investors concerned about weak economic growth. German Stark, a top ECB board member resigned with both Europe and the US falling further at the close.
This morning, Asian markets plunged after Friday's steep selling in Europe and the US. Also, as the dollar strengthened, investors shunned commodity risk because of Europe's deepening sovereign debt crisis. Friday's resignation of ECB board member German Juergen Stark has cast further doubt that Europe has the ability to tackle its worsening sovereign debt crisis.
Last week, global equities and commodities were decimated as investors worry that the US is falling into recession and on concerns that Europe's sovereign debt crisis is deepening. The only assets that finished in positive territory were gold and the US Dollar as safe havens were sought.
Although Italy's centre-right government promised on Tuesday to hike value-added tax as it bowed to market pressure for more action on its swollen debt and ignored mass street protests and strikes against its austerity measures and Greece's finance minister pledged to speed up delayed privatisations and structural reforms, while his Irish counterpart said Dublin was considering making a deeper fiscal adjustment than planned next year to boost market confidence, investors fled from equities, sold the Euro and purchased the US Dollar and treasuries. Greece's one year bond hit yields of over 80 percent last week, which is signalling that the markets believe that a default is inevitable.
Unless world leaders come up with clear fiscal policy solutions, we can expect global markets to continue to be volatile with a bias towards lower values.
Monday, September 12, 2011
Wednesday, September 7, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, 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. European shares gained tracking a late rally in Wall Street on Friday, after U.S. Federal Reserve chairman Ben Bernanke raised hopes for more stimulus for the troubled economy at the U.S. central bank's September meeting. US stockmarkets rose supported by European and Asian equities that rallied partly on a possible merger between two big banks in Greece. Wall Street traders were also relieved that Hurricane Irene caused less damage than feared in New York City over the weekend.
On Tuesday, Asian stockmarkets rose after better-than-expected U.S. consumer spending data and a bank merger in Greece offered investors some rare good news about the outlook for indebted developed world economies. European indices initially fell except for London (which played catch up as it was a bank holiday on Monday in the UK) as consumer and business confidence in the eurozone economy slumped in August, falling for the sixth consecutive month, an EU survey showed amid rising fears of an economic slowdown. European markets recovered towards the end of the day and closed mixed. Wall Street closed positive in choppy trade as a recovery in risk appetite among some investors was countered by bearish economic news. U.S. consumer confidence hit a two-year low in August and prices of single-family homes dipped in June from May as the U.S. housing market continued to crawl along at depressed levels, data showed.
On Wednesday, Asian stockmarkets rose as investors put aside concerns over flagging consumer and business confidence in developed economies to hunt for bargains after gains on Wall Street. European shares rocketed on hopes the U.S. Federal Reserve would support the fragile recovery with fresh stimulus measures. US markets rose as hopes for more help from the U.S. Federal Reserve drove buying in equities, oil and metals.
On Thursday, Asian markets rose as China's official purchasing managers' index rose to 50.9 in August from a 28-month low of 50.7 in July, official data showed, while upbeat sentiment across financial markets lifted Asian stocks on hopes the U.S. Federal Reserve would intervene to support the economy. European shares slid on dismal eurozone manufacturing figures, making a downbeat start to September after an extremely volatile August which was haunted by shadows of global recession but recovered towards the close with investors encouraged by data showing U.S. factory activity cooling in August but still expanding. The eurozone manufacturing purchasing managers' index (PMI), compiled by Markit, logged 49.0 points in August, down from 50.4 in July. Any score below 50 indicates contraction, while anything above suggests expansion. US stockmarkets fell as data spurred fears of recession as investors wait for tomorrow's U.S. jobs data for August.
On Friday, Asian stockmarkets fell on weak global data and fears of recession. European markets plunged on renewed concern over the Greek debt crisis. US indices fell on very weak employment figures where the private sector created 17,000 jobs only in August which was offset by the US Government where employment went down by about 17,000 jobs. This last occurred sixty years ago.
This morning, Asian markets fell on Friday's disappointing US jobs data.
Last week, global equities and commodities fell on fears that the global economy is entering recession. Consumer and business confidence slunped in the Eurozone and US during August. In the US, prices of single family homes dipped in June which shows that the US housing market has not yet reached bottom. On Friday, The zero net growth in US jobs in August reinforced concerns that the US economy has stalled. Gold and silver were the only beneficiaries.
While two weeks ago, mounting speculation that the Fed is preparing a new round of monetary expansion helped the market regain its footing, last week both businesses and consumers were very worried by the slowdown in domestic economic activity, heightened financial market turmoil, ongoing serious concerns over the eurozone sovereign debt situation and increased fears over the health of the global economy. Investors fear that without further stimulus, the global economy will fall into recession.
Short term, the markets will have to jump the hurdle of this Wednesday's German Federal Constitutional court ruling on suits claiming Berlin is breaking German law and European treaties by contributing to multi-billion euro bailouts of Greece, Ireland and Portugal. Longer term, the result of the FEDS two day meeting on 20-21 September will greatly affect markets as the Federal Reserve are under pressure to provide more stimulus to aid the frail recovery.
Volatility is expected to continue until we know the outcome of these two important events.
On Monday, 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. European shares gained tracking a late rally in Wall Street on Friday, after U.S. Federal Reserve chairman Ben Bernanke raised hopes for more stimulus for the troubled economy at the U.S. central bank's September meeting. US stockmarkets rose supported by European and Asian equities that rallied partly on a possible merger between two big banks in Greece. Wall Street traders were also relieved that Hurricane Irene caused less damage than feared in New York City over the weekend.
On Tuesday, Asian stockmarkets rose after better-than-expected U.S. consumer spending data and a bank merger in Greece offered investors some rare good news about the outlook for indebted developed world economies. European indices initially fell except for London (which played catch up as it was a bank holiday on Monday in the UK) as consumer and business confidence in the eurozone economy slumped in August, falling for the sixth consecutive month, an EU survey showed amid rising fears of an economic slowdown. European markets recovered towards the end of the day and closed mixed. Wall Street closed positive in choppy trade as a recovery in risk appetite among some investors was countered by bearish economic news. U.S. consumer confidence hit a two-year low in August and prices of single-family homes dipped in June from May as the U.S. housing market continued to crawl along at depressed levels, data showed.
On Wednesday, Asian stockmarkets rose as investors put aside concerns over flagging consumer and business confidence in developed economies to hunt for bargains after gains on Wall Street. European shares rocketed on hopes the U.S. Federal Reserve would support the fragile recovery with fresh stimulus measures. US markets rose as hopes for more help from the U.S. Federal Reserve drove buying in equities, oil and metals.
On Thursday, Asian markets rose as China's official purchasing managers' index rose to 50.9 in August from a 28-month low of 50.7 in July, official data showed, while upbeat sentiment across financial markets lifted Asian stocks on hopes the U.S. Federal Reserve would intervene to support the economy. European shares slid on dismal eurozone manufacturing figures, making a downbeat start to September after an extremely volatile August which was haunted by shadows of global recession but recovered towards the close with investors encouraged by data showing U.S. factory activity cooling in August but still expanding. The eurozone manufacturing purchasing managers' index (PMI), compiled by Markit, logged 49.0 points in August, down from 50.4 in July. Any score below 50 indicates contraction, while anything above suggests expansion. US stockmarkets fell as data spurred fears of recession as investors wait for tomorrow's U.S. jobs data for August.
On Friday, Asian stockmarkets fell on weak global data and fears of recession. European markets plunged on renewed concern over the Greek debt crisis. US indices fell on very weak employment figures where the private sector created 17,000 jobs only in August which was offset by the US Government where employment went down by about 17,000 jobs. This last occurred sixty years ago.
This morning, Asian markets fell on Friday's disappointing US jobs data.
Last week, global equities and commodities fell on fears that the global economy is entering recession. Consumer and business confidence slunped in the Eurozone and US during August. In the US, prices of single family homes dipped in June which shows that the US housing market has not yet reached bottom. On Friday, The zero net growth in US jobs in August reinforced concerns that the US economy has stalled. Gold and silver were the only beneficiaries.
While two weeks ago, mounting speculation that the Fed is preparing a new round of monetary expansion helped the market regain its footing, last week both businesses and consumers were very worried by the slowdown in domestic economic activity, heightened financial market turmoil, ongoing serious concerns over the eurozone sovereign debt situation and increased fears over the health of the global economy. Investors fear that without further stimulus, the global economy will fall into recession.
Short term, the markets will have to jump the hurdle of this Wednesday's German Federal Constitutional court ruling on suits claiming Berlin is breaking German law and European treaties by contributing to multi-billion euro bailouts of Greece, Ireland and Portugal. Longer term, the result of the FEDS two day meeting on 20-21 September will greatly affect markets as the Federal Reserve are under pressure to provide more stimulus to aid the frail recovery.
Volatility is expected to continue until we know the outcome of these two important events.
Monday, August 29, 2011
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.
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.
Friday, August 12, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, Asian shares fell and the dollar languished near a record low against the Swiss franc, as investors took fright at a downgrade of the U.S. credit rating, while gold powered to another new record high of $1,712 an ounce despite pledges by the G7 and the ECB. The falls continued although G7 finance ministers that they were "ready to take action to ensure stability and liquidity in markets" and the ECB said that it would "actively implement" its controversial bond-buying programme to fight the euro zone's debt crisis and actively start buying Spanish and Italian debt. European and US markets extended last week's rout with the Dow Jones industrial average ending 5.55 percent lower following Friday's historic downgrade of the U.S. AAA credit grade by ratings firm Standard & Poor's.
On Tuesday, Asian stockmarkets nosedived and the Swiss franc held near a record high, as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States while gold hit a new high of $1,778 an ounce. The news that Chinese consumer prices in July rose 6.5 percent from a year earlier contributed to these falls, but Asian markets later staged a sharp rebound from early lows. European and US markets recovered after initially falling in a highly volatile session and closed into positive territory after the U.S. Federal Reserve promised to extend near-zero interest rates for two more years and said it would consider further steps to help growth..
On Wednesday, Asian stocks rebounded, following a jump in U.S. shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being. European markets got hammered on worries that the debt crisis in Europe is spilling in to France amid a weaker economic outlook in the United States. A storm of market questions on the financial solidity of a major French bank and talk of an impending downgrade of France's credit rating, all denied by authorities, rattled financial markets. Safe-haven buying lifted gold above $1,800 per ounce for the first time and oil rebounded from six month lows on Wedesday as confidence in the U.S. and euro zone economies eroded fast. U.S. stockmarkets also fell on fears about the French banking sector's exposure to shaky European debt and its possible spillover onto U.S. banks.
On Thursday, Asian stocks fell 1-2 percent as the fallout from Wall Street's 4 percent drop overnight was limited by a rise in U.S. stock futures, while gold climbed above $1,800 an ounce to a new record, reflecting fears over Europe's worsening financial crisis. European markets initially fell as French bank's shares prices and the cost of insuring Italian government bonds against default hit a record high and the country's stock market fell again as politicians raised doubts about Prime Minister Silvio Berlusconi's new austerity plan. However, European and US stockmarkets rose strongly as a strong U.S. jobs report trumped early concerns about French banks and fears that Europe's debt crisis will spread.
On Friday, Asian stocks edged up, as investors hunted for value after an intense week of volatility, though the festering European financial crisis may mean that havens like gold and the Swiss franc may still draw buyers. European markets rose as regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators.Wall Street rose gently at the time of writing as traders dissected mixed reports on consumer sentiment, retail sales and business inventories. The government says that consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But a survey on consumer sentiment fell to its lowest level in more than 30 years. And a separate report showed that businesses increased their stockpiles in July by the smallest amount since May 2010.
Another volatile week in the markets where investors continued to sell equities and commodities and seek safe havens such as gold, the Swiss Franc and US treasuries. This week gold breeched $1,800 an ounce temporarily. Besides last week's fears of a US slowdown and spikes of over 6 percent in Spanish and Italian bonds which were unsustainable, this week investors sold on rumours of a downgrade in France's credit rating and fears that Societe Generale may become insolvent and has to be bailed out by the French Government. French authorities denied this and markets bounced back today on the back of a ban on short selling of financial shares in many European markets, especially Spain, Italy and France.
Such volatility is expected to continue for a few weeks until it is clear whether the US economy will fall into recession again and if the Eurozone countries can muddle through the debt crisis.
On Monday, Asian shares fell and the dollar languished near a record low against the Swiss franc, as investors took fright at a downgrade of the U.S. credit rating, while gold powered to another new record high of $1,712 an ounce despite pledges by the G7 and the ECB. The falls continued although G7 finance ministers that they were "ready to take action to ensure stability and liquidity in markets" and the ECB said that it would "actively implement" its controversial bond-buying programme to fight the euro zone's debt crisis and actively start buying Spanish and Italian debt. European and US markets extended last week's rout with the Dow Jones industrial average ending 5.55 percent lower following Friday's historic downgrade of the U.S. AAA credit grade by ratings firm Standard & Poor's.
On Tuesday, Asian stockmarkets nosedived and the Swiss franc held near a record high, as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States while gold hit a new high of $1,778 an ounce. The news that Chinese consumer prices in July rose 6.5 percent from a year earlier contributed to these falls, but Asian markets later staged a sharp rebound from early lows. European and US markets recovered after initially falling in a highly volatile session and closed into positive territory after the U.S. Federal Reserve promised to extend near-zero interest rates for two more years and said it would consider further steps to help growth..
On Wednesday, Asian stocks rebounded, following a jump in U.S. shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being. European markets got hammered on worries that the debt crisis in Europe is spilling in to France amid a weaker economic outlook in the United States. A storm of market questions on the financial solidity of a major French bank and talk of an impending downgrade of France's credit rating, all denied by authorities, rattled financial markets. Safe-haven buying lifted gold above $1,800 per ounce for the first time and oil rebounded from six month lows on Wedesday as confidence in the U.S. and euro zone economies eroded fast. U.S. stockmarkets also fell on fears about the French banking sector's exposure to shaky European debt and its possible spillover onto U.S. banks.
On Thursday, Asian stocks fell 1-2 percent as the fallout from Wall Street's 4 percent drop overnight was limited by a rise in U.S. stock futures, while gold climbed above $1,800 an ounce to a new record, reflecting fears over Europe's worsening financial crisis. European markets initially fell as French bank's shares prices and the cost of insuring Italian government bonds against default hit a record high and the country's stock market fell again as politicians raised doubts about Prime Minister Silvio Berlusconi's new austerity plan. However, European and US stockmarkets rose strongly as a strong U.S. jobs report trumped early concerns about French banks and fears that Europe's debt crisis will spread.
On Friday, Asian stocks edged up, as investors hunted for value after an intense week of volatility, though the festering European financial crisis may mean that havens like gold and the Swiss franc may still draw buyers. European markets rose as regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators.Wall Street rose gently at the time of writing as traders dissected mixed reports on consumer sentiment, retail sales and business inventories. The government says that consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But a survey on consumer sentiment fell to its lowest level in more than 30 years. And a separate report showed that businesses increased their stockpiles in July by the smallest amount since May 2010.
Another volatile week in the markets where investors continued to sell equities and commodities and seek safe havens such as gold, the Swiss Franc and US treasuries. This week gold breeched $1,800 an ounce temporarily. Besides last week's fears of a US slowdown and spikes of over 6 percent in Spanish and Italian bonds which were unsustainable, this week investors sold on rumours of a downgrade in France's credit rating and fears that Societe Generale may become insolvent and has to be bailed out by the French Government. French authorities denied this and markets bounced back today on the back of a ban on short selling of financial shares in many European markets, especially Spain, Italy and France.
Such volatility is expected to continue for a few weeks until it is clear whether the US economy will fall into recession again and if the Eurozone countries can muddle through the debt crisis.
Monday, August 8, 2011
Weekly Market Summary
By Raymond Chatlani
This morning, Asian stockmarkets rose after U.S. President Barack Obama said congressional leaders agreed to raise the nation's borrowing limit and avert a default by the world's top oil consumer. Both Euope and Wall Street fell as manufacturing activity barely grew in July, falling to the weakest level since just after the recession ended. The Institute for Supply Management, a trade group of purchasing executives, says its index of manufacturing activity fell to 50.9 percent in July from 55.3 percent in June. That's the lowest reading since July 2009, one month after the recession officially ended.
On Tuesday, Asian shares fell on concerns about the health of the global economy after sluggish U.S. manufacturing data. European markets hit their lowest close in 11 months as weak global growth replaced the U.S. debt ceiling row as investors' main concern and banks fell on worries about the euro zone peripheral debt crisis. Europe's sovereign debt crisis contributed to the gloom as Italian bond yields hit their highest in the euro's 11-year lifetime today .US stockmarkets fell as investors fretted about a possible credit downgrade amid concerns that economic growth could remain subdued. Many investors fear that even if the US debt ceiling is raised, the measures would not be enough to avoid a credit downgrade which will raise borrowing costs. Also, in the latest economic data, U.S. consumer spending fell unexpectedly in June to post the first decline in nearly two years as incomes barely rose, the government reported.
On Wednesday, Asian stockmarkets fell for a second successive day and safe haven assets such as gold and the Swiss franc shone as renewed fears about the health of the global economy rattled financial markets. Confirmation of a last-gasp deal to avoid a default by the United States failed to bring any relief, as investors focused instead on worries that major economies could slip back into recession amid weak data and Europe's festering debt crisis. Gold hit anew all time high of $1,662 an ounce. European markets fell on the back that the last three days in the USA, a weak manufacturing report has been delivered, fresh signs the US consumer is ailing and, yesterday, evidence the country’s services sector is slowing. For investors it opens a new front of worry besides Europe, where Italy and Spain are in the eye of the debt storm. Wall Street fell initially as U.S. service firms, which employ nearly 90 percent of the country's work force, experienced their weakest growth in 17 months in July, but finished in positive territory as investors saw value and scupped up beaten down shares. The report confirms other data that show the economy is struggling two years after the recession ended.
On Thursday, Asian stockmarkets mostly fell as worries about slowing global growth sapped investor enthusiasm. Markets are also awaiting results of a Spanish bond auction after yields on Spanish and Italian bonds jumped in recent sessions on fears those economies would be engulfed by debt problems. Gold hit another record new high of $1,678 an ounce. European and US markets fell and commodities tumbled, trampled by a global stampede away from riskier assets as investors panicked over mounting signs of a sluggish U.S. economy as the US Labor Department reported that weekly claims for unemployment benefits remained at a high 400,000 last week.
On Friday, Asian stocks dropped 3 to 4 percent after panic triggered the worst sell-off on Wall Street since the global financial crisis, sending investors slashing positions and scrambling for cash and government bonds. Initially, European stocks fell heavily as the selling continued although nonfarm payrolls increased 117,000, the US Labor Department said, above market expectations for an 85,000 gain. The unemployment rate dipped to 9.1 percent from 9.2 percent in June, mostly the result of people leaving the labor force. Wall Street rallied at the open but closed mixed as S & P lowered the USA's credit rating to AA+ from AAA.
This morning, Asian shares fell and the dollar languished near a record low against the Swiss franc, as investors took fright at a downgrade of the U.S. credit rating, while gold powered to another new record high of $1,712 an ounce despite pledges by the G7 and the ECB. The falls continued although G7 finance ministers that they were "ready to take action to ensure stability and liquidity in markets" and the ECB said that it would "actively implement" its controversial bond-buying programme to fight the euro zone's debt crisis and actively start buying Spanish and Italian debt..
The worst week for global markets since 2008 as investors fear that the US may enter into recession and that Eurozone countries will be unable to rollover their debts at reasonable interest rates. Last week we saw a flight to safety as equities tanked and investors sought safe havens such as the Swiss Franc, US treasuries and gold.
In the US, in the past two weeks, we have seen consumer spending and private sector employment fall, a weak manufacturing report and lower durable goods orders and the US debt ceiling was raised as the US Government pledged to cut the US deficit which means that there will be no spending on economic stimulus. Also, the Federal Reserve is reluctant to do anything more. Without much to invigorate growth, the US economy may be in danger of slipping into a stupor like the one Japan has failed to shake off for more than a decade, so Wall Street is spooked.
Italian and Spanish bond rates rose above 6 percent which is unsustainable as investors panicked and started to dump them. Clearly, the second Greek bailout two weeks ago did nothing to calm the markets. The S & P downgrade of the US credit rating to AA+ on Friday affected Asian markets this morning and US futures are well down.
Markets may continue to fall for a number of weeks until investors are reassured that Government authorities will ensure that there is ample liquidity in the markets. Many analysts believe that there will be great opportunities in certain sectors of the markets when this correction is eventually over. Across the world company fundamentals are in much better shape than three years ago. Firms have cut costs, borrowings are a lot lower and growth seems to be returning across a number of sectors.
This morning, Asian stockmarkets rose after U.S. President Barack Obama said congressional leaders agreed to raise the nation's borrowing limit and avert a default by the world's top oil consumer. Both Euope and Wall Street fell as manufacturing activity barely grew in July, falling to the weakest level since just after the recession ended. The Institute for Supply Management, a trade group of purchasing executives, says its index of manufacturing activity fell to 50.9 percent in July from 55.3 percent in June. That's the lowest reading since July 2009, one month after the recession officially ended.
On Tuesday, Asian shares fell on concerns about the health of the global economy after sluggish U.S. manufacturing data. European markets hit their lowest close in 11 months as weak global growth replaced the U.S. debt ceiling row as investors' main concern and banks fell on worries about the euro zone peripheral debt crisis. Europe's sovereign debt crisis contributed to the gloom as Italian bond yields hit their highest in the euro's 11-year lifetime today .US stockmarkets fell as investors fretted about a possible credit downgrade amid concerns that economic growth could remain subdued. Many investors fear that even if the US debt ceiling is raised, the measures would not be enough to avoid a credit downgrade which will raise borrowing costs. Also, in the latest economic data, U.S. consumer spending fell unexpectedly in June to post the first decline in nearly two years as incomes barely rose, the government reported.
On Wednesday, Asian stockmarkets fell for a second successive day and safe haven assets such as gold and the Swiss franc shone as renewed fears about the health of the global economy rattled financial markets. Confirmation of a last-gasp deal to avoid a default by the United States failed to bring any relief, as investors focused instead on worries that major economies could slip back into recession amid weak data and Europe's festering debt crisis. Gold hit anew all time high of $1,662 an ounce. European markets fell on the back that the last three days in the USA, a weak manufacturing report has been delivered, fresh signs the US consumer is ailing and, yesterday, evidence the country’s services sector is slowing. For investors it opens a new front of worry besides Europe, where Italy and Spain are in the eye of the debt storm. Wall Street fell initially as U.S. service firms, which employ nearly 90 percent of the country's work force, experienced their weakest growth in 17 months in July, but finished in positive territory as investors saw value and scupped up beaten down shares. The report confirms other data that show the economy is struggling two years after the recession ended.
On Thursday, Asian stockmarkets mostly fell as worries about slowing global growth sapped investor enthusiasm. Markets are also awaiting results of a Spanish bond auction after yields on Spanish and Italian bonds jumped in recent sessions on fears those economies would be engulfed by debt problems. Gold hit another record new high of $1,678 an ounce. European and US markets fell and commodities tumbled, trampled by a global stampede away from riskier assets as investors panicked over mounting signs of a sluggish U.S. economy as the US Labor Department reported that weekly claims for unemployment benefits remained at a high 400,000 last week.
On Friday, Asian stocks dropped 3 to 4 percent after panic triggered the worst sell-off on Wall Street since the global financial crisis, sending investors slashing positions and scrambling for cash and government bonds. Initially, European stocks fell heavily as the selling continued although nonfarm payrolls increased 117,000, the US Labor Department said, above market expectations for an 85,000 gain. The unemployment rate dipped to 9.1 percent from 9.2 percent in June, mostly the result of people leaving the labor force. Wall Street rallied at the open but closed mixed as S & P lowered the USA's credit rating to AA+ from AAA.
This morning, Asian shares fell and the dollar languished near a record low against the Swiss franc, as investors took fright at a downgrade of the U.S. credit rating, while gold powered to another new record high of $1,712 an ounce despite pledges by the G7 and the ECB. The falls continued although G7 finance ministers that they were "ready to take action to ensure stability and liquidity in markets" and the ECB said that it would "actively implement" its controversial bond-buying programme to fight the euro zone's debt crisis and actively start buying Spanish and Italian debt..
The worst week for global markets since 2008 as investors fear that the US may enter into recession and that Eurozone countries will be unable to rollover their debts at reasonable interest rates. Last week we saw a flight to safety as equities tanked and investors sought safe havens such as the Swiss Franc, US treasuries and gold.
In the US, in the past two weeks, we have seen consumer spending and private sector employment fall, a weak manufacturing report and lower durable goods orders and the US debt ceiling was raised as the US Government pledged to cut the US deficit which means that there will be no spending on economic stimulus. Also, the Federal Reserve is reluctant to do anything more. Without much to invigorate growth, the US economy may be in danger of slipping into a stupor like the one Japan has failed to shake off for more than a decade, so Wall Street is spooked.
Italian and Spanish bond rates rose above 6 percent which is unsustainable as investors panicked and started to dump them. Clearly, the second Greek bailout two weeks ago did nothing to calm the markets. The S & P downgrade of the US credit rating to AA+ on Friday affected Asian markets this morning and US futures are well down.
Markets may continue to fall for a number of weeks until investors are reassured that Government authorities will ensure that there is ample liquidity in the markets. Many analysts believe that there will be great opportunities in certain sectors of the markets when this correction is eventually over. Across the world company fundamentals are in much better shape than three years ago. Firms have cut costs, borrowings are a lot lower and growth seems to be returning across a number of sectors.
Monday, August 1, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, gold hit a record high above $1,620 an ounce, while the dollar steadied and Asian stocks slipped as investors piled into bullion over fears of a possible U.S. debt default as the debt ceiling talks in Washington stalled. Financials led european stockmarkets down on US debt concerns. US markets fell as political brinkmanship in Washington over the debt ceiling sparked fears of a U.S. rating downgrade. Gold surged to another record high, while oil and other commodities fell as the countdown for the United States to reach a debt deal or face a disastrous default drove investors into safer assets.
On Tuesday, Asian shares edged higher, bouncing back from a slide the previous day, after U.S. stocks posted only modest losses in reaction to the worsening deadlock in Washington over raising the debt limit and avoiding a technical bond default. Commodities rose broadly on Tuesday, with copper and corn outperforming the pack, as fear of a U.S. credit default sank the dollar and investors sought assets that could preserve value. European and US stockmarkets fell on a stalemate in US debt talks.
On Wednesday, Asian stocks rebounded and the U.S. dollar fell while gold hit a record high at more than $1,624 an ounce, as a drip feed of news out of Washington indicated politicians were making little progress on a plan to lift the U.S. debt ceiling. European markets fell for a third day as Italian banks tumbled in Milan as the Eurozone debt crisis resurfaced as Spain and Italy's borrowing costs marched back towards euro-era highs. Analysts said that this is due to Merkel's failure to confirm the bail-out plans until "after the parliamentary summer break". US stockmarkets fell amid continued gridlock for lawmakers debating how to avoid a debt default and a weak report on orders for manufactured goods. The government said that orders for durable goods fell 2.1 percent in June because of a drop in orders for commercial aircraft, automobiles and heavy machinery.
On Thursday, Asian markets tumbled following big losses on Wall Street, as the deadline approaches for US lawmakers to strike a deal to avoid a disastrous default. The White House and Democrats and their Republican rivals continue to bicker over a deficit-slashing plan that would allow a hike in the US debt ceiling, despite the government running out of money to pay its bills within a week. European shares fell for a fourth straight session to hit a one-week low as disappointing earnings and cautious comments from major European companies raised concerns about corporate profits. US stockmarkets fell as a stalemate continued over the U.S. debt limit even though there was a strong jobs report. The number of Americans claiming new unemployment benefits last week dropped below the 400,000 level for the first time since early April, a hopeful sign for the economy which has struggled to regain momentum.
On Friday, Asian stockmarkets fell as U.S. lawmakers squabbled over a compromise to avoid an unprecedented debt default, while growing worries about Europe's debt crisis weighed on the euro, adding to investor wariness. European markets fell after Moody's threatend to downgrade Spanish, adding to concerns that a Greek rescue package has done little to halt the spread of the eurozone debt crisis. Wall Street fell to post its worst weekly losses in nearly a year after data showed meager growth in the economy and debt deal deadlock kept investors nervous. The economy expanded at meager 1.3 percent annual rate in the spring after scarcely growing at all in the first three months of the year, the Commerce Department said Friday. Gold hit a new high of $1,632 an ounce.
This morning, Asian stockmarkets rose after U.S. President Barack Obama said congressional leaders agreed to raise the nation's borrowing limit and avert a default by the world's top oil consumer.
Last week, global markets fell significantly on fears of US lawmakers failing to lift the country's $14.3 trillion borrowing ceiling and risking a default and possible downgrade of its prized AAA credit rating as investors lost appetite for risky assets. Also, throughout last week's increasingly intense showdown in Washington over the U.S. debt ceiling, the spreads of Italian and Spanish bond yields over Germany widened sharply, signifying persistent unease that Greece's problem may spread to other European countries. Investors flocked to gold as a safe haven which hit a new record high of $1,632 an ounce on Friday.
This morning's news that the US debt ceiling will be raised should be positive for markets this week but will depend on whatever fiscal accord have been agreed. Details of this agreement will be revealed later today and tomorrow. European and US futures are already up and gold fell one percent this morning as investors are seeking riskier assets in anticipation of this new accord passing both the Senate and the House.
On Monday, gold hit a record high above $1,620 an ounce, while the dollar steadied and Asian stocks slipped as investors piled into bullion over fears of a possible U.S. debt default as the debt ceiling talks in Washington stalled. Financials led european stockmarkets down on US debt concerns. US markets fell as political brinkmanship in Washington over the debt ceiling sparked fears of a U.S. rating downgrade. Gold surged to another record high, while oil and other commodities fell as the countdown for the United States to reach a debt deal or face a disastrous default drove investors into safer assets.
On Tuesday, Asian shares edged higher, bouncing back from a slide the previous day, after U.S. stocks posted only modest losses in reaction to the worsening deadlock in Washington over raising the debt limit and avoiding a technical bond default. Commodities rose broadly on Tuesday, with copper and corn outperforming the pack, as fear of a U.S. credit default sank the dollar and investors sought assets that could preserve value. European and US stockmarkets fell on a stalemate in US debt talks.
On Wednesday, Asian stocks rebounded and the U.S. dollar fell while gold hit a record high at more than $1,624 an ounce, as a drip feed of news out of Washington indicated politicians were making little progress on a plan to lift the U.S. debt ceiling. European markets fell for a third day as Italian banks tumbled in Milan as the Eurozone debt crisis resurfaced as Spain and Italy's borrowing costs marched back towards euro-era highs. Analysts said that this is due to Merkel's failure to confirm the bail-out plans until "after the parliamentary summer break". US stockmarkets fell amid continued gridlock for lawmakers debating how to avoid a debt default and a weak report on orders for manufactured goods. The government said that orders for durable goods fell 2.1 percent in June because of a drop in orders for commercial aircraft, automobiles and heavy machinery.
On Thursday, Asian markets tumbled following big losses on Wall Street, as the deadline approaches for US lawmakers to strike a deal to avoid a disastrous default. The White House and Democrats and their Republican rivals continue to bicker over a deficit-slashing plan that would allow a hike in the US debt ceiling, despite the government running out of money to pay its bills within a week. European shares fell for a fourth straight session to hit a one-week low as disappointing earnings and cautious comments from major European companies raised concerns about corporate profits. US stockmarkets fell as a stalemate continued over the U.S. debt limit even though there was a strong jobs report. The number of Americans claiming new unemployment benefits last week dropped below the 400,000 level for the first time since early April, a hopeful sign for the economy which has struggled to regain momentum.
On Friday, Asian stockmarkets fell as U.S. lawmakers squabbled over a compromise to avoid an unprecedented debt default, while growing worries about Europe's debt crisis weighed on the euro, adding to investor wariness. European markets fell after Moody's threatend to downgrade Spanish, adding to concerns that a Greek rescue package has done little to halt the spread of the eurozone debt crisis. Wall Street fell to post its worst weekly losses in nearly a year after data showed meager growth in the economy and debt deal deadlock kept investors nervous. The economy expanded at meager 1.3 percent annual rate in the spring after scarcely growing at all in the first three months of the year, the Commerce Department said Friday. Gold hit a new high of $1,632 an ounce.
This morning, Asian stockmarkets rose after U.S. President Barack Obama said congressional leaders agreed to raise the nation's borrowing limit and avert a default by the world's top oil consumer.
Last week, global markets fell significantly on fears of US lawmakers failing to lift the country's $14.3 trillion borrowing ceiling and risking a default and possible downgrade of its prized AAA credit rating as investors lost appetite for risky assets. Also, throughout last week's increasingly intense showdown in Washington over the U.S. debt ceiling, the spreads of Italian and Spanish bond yields over Germany widened sharply, signifying persistent unease that Greece's problem may spread to other European countries. Investors flocked to gold as a safe haven which hit a new record high of $1,632 an ounce on Friday.
This morning's news that the US debt ceiling will be raised should be positive for markets this week but will depend on whatever fiscal accord have been agreed. Details of this agreement will be revealed later today and tomorrow. European and US futures are already up and gold fell one percent this morning as investors are seeking riskier assets in anticipation of this new accord passing both the Senate and the House.
Tuesday, July 26, 2011
Weekly Market Summary
by Raymond Chatlani
On Monday, Asian markets fell modestly on worries about Europe's banking woes and debt problems in the U.S. European stockmarkets continued to fall on sovereign debt woes and last Friday's stress tests with banks' share prices falling heavily. Mounting fears that politicians will fail to resolve the eurorozone's debt crisis sent markets sliding and Spain and Italy's borrowing costs nearing the "point of no return". The yields, or returns, on Spanish and Italian 10-year government debt hit euro-era highs over 6pc as investors demanded greater reward to shoulder the risk. Investors are unconvinced that the euro-sharing nations will manage to reach agreement on a second bail-out for Greece before Thursday's crunch summit in Brussels. US markets fell over Europe's banking troubles and an impasse over lifting the U.S. government's borrowing limit with gold breeching a new all time high above $1,600 an ounce and silver over $40 an ounce on safe haven demand.
On Tuesday, Asian stockmarkets continued to fall on sovereign debt fears. European markets bounced back led by banks but caution remained ahead of a crucial summit on Thursday where eurozone leaders will try to agree on a second rescue package for debt-stricken Greece. US markets rose as a strong quarterly report from IBM and Coca-Cola and a surge in housing starts sparked investor optimism a day after a selloff. Housing starts topped forecasts in June to touch a six-month high, and permits for future construction unexpectedly increased, the government reported. Also, President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country's $14.3 trillion debt ceiling.
On Wednesday, Asian shares rose as indications of progress on a U.S. budget-reduction deal boosted investor confidence while encouraging quarterly numbers from Apple Inc and International Business Machines Corp helped Asia's beaten-down tech sector gain for a second day. European markets rose boosted by gains in Asia and overnight on Wall Street, as investors assessed global debt concerns. US stockmarkets closed nearly unchanged as the oncoming debt ceiling deadline overshadowed strong earnings from Apple Inc. Apple hit another all-time high one day after the maker of the iPhone and iPad reported quarterly revenues that far exceeded expectationsinvestors sat on their hands amid the unresolved debt ceiling crisis in Washington as the White House and Congress were negotiating a deal to raise the U.S. debt ceiling before a looming default on Aug. 2.
On Thursday, Asian stockmarkets mostly fell as poor manufacturing data on top copper consumer China countered optimism about progress in resolving debt woes in Europe and the United States as it suggests that the Chinese economy is slowing down. European and US markets surged as EU leaders agreed on a package to rescue Greece. The Greek economy will get an injection of 109bn euros (£95.9bn) with more from the private sector in the coming decades.
On Friday, Asian stockmarkets rose after European leaders agreed on a package to rescue debt-stricken Greece and gains will be sustained if U.S. policymakers also manage to cobble together a last minute deal. European markets rose on the Greek bailout package. US indices closed mixed as Caterpillar's profit missed estimates, offsetting a strong report from GE and an agreement on a Greece rescue package.
This morning, Gold hit a record high above $1,620 an ounce, while the dollar steadied and Asian stocks slipped as investors piled into bullion over fears of a possible U.S. debt default as the debt ceiling talks in Washington stalled.
Last week, global markets fell early in the week on Greek default concerns and fears that the US debt ceiling would not be raised. This all turned around on Thursday when EU leaders agreed to inject 109bn euros (£95.9bn) into the Greek economy with more from the private sector in the coming decades. Investors also became optimistic that US policymakers would reach an agreement to raise the US debt ceiling in time.
Commodities gained last week as precious metals such as gold and silver were purchased as safe havens. Oil also hit a three week high on optimism that Europe was tackling its huge debt problem while agricultural markets rallied on worries about the impact of excessive summer heat on crops.
This week, US corporate earnings should continue to be positive but markets may still fall if no comprise is reached to raise the US debt ceiling.
On Monday, Asian markets fell modestly on worries about Europe's banking woes and debt problems in the U.S. European stockmarkets continued to fall on sovereign debt woes and last Friday's stress tests with banks' share prices falling heavily. Mounting fears that politicians will fail to resolve the eurorozone's debt crisis sent markets sliding and Spain and Italy's borrowing costs nearing the "point of no return". The yields, or returns, on Spanish and Italian 10-year government debt hit euro-era highs over 6pc as investors demanded greater reward to shoulder the risk. Investors are unconvinced that the euro-sharing nations will manage to reach agreement on a second bail-out for Greece before Thursday's crunch summit in Brussels. US markets fell over Europe's banking troubles and an impasse over lifting the U.S. government's borrowing limit with gold breeching a new all time high above $1,600 an ounce and silver over $40 an ounce on safe haven demand.
On Tuesday, Asian stockmarkets continued to fall on sovereign debt fears. European markets bounced back led by banks but caution remained ahead of a crucial summit on Thursday where eurozone leaders will try to agree on a second rescue package for debt-stricken Greece. US markets rose as a strong quarterly report from IBM and Coca-Cola and a surge in housing starts sparked investor optimism a day after a selloff. Housing starts topped forecasts in June to touch a six-month high, and permits for future construction unexpectedly increased, the government reported. Also, President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country's $14.3 trillion debt ceiling.
On Wednesday, Asian shares rose as indications of progress on a U.S. budget-reduction deal boosted investor confidence while encouraging quarterly numbers from Apple Inc and International Business Machines Corp helped Asia's beaten-down tech sector gain for a second day. European markets rose boosted by gains in Asia and overnight on Wall Street, as investors assessed global debt concerns. US stockmarkets closed nearly unchanged as the oncoming debt ceiling deadline overshadowed strong earnings from Apple Inc. Apple hit another all-time high one day after the maker of the iPhone and iPad reported quarterly revenues that far exceeded expectationsinvestors sat on their hands amid the unresolved debt ceiling crisis in Washington as the White House and Congress were negotiating a deal to raise the U.S. debt ceiling before a looming default on Aug. 2.
On Thursday, Asian stockmarkets mostly fell as poor manufacturing data on top copper consumer China countered optimism about progress in resolving debt woes in Europe and the United States as it suggests that the Chinese economy is slowing down. European and US markets surged as EU leaders agreed on a package to rescue Greece. The Greek economy will get an injection of 109bn euros (£95.9bn) with more from the private sector in the coming decades.
On Friday, Asian stockmarkets rose after European leaders agreed on a package to rescue debt-stricken Greece and gains will be sustained if U.S. policymakers also manage to cobble together a last minute deal. European markets rose on the Greek bailout package. US indices closed mixed as Caterpillar's profit missed estimates, offsetting a strong report from GE and an agreement on a Greece rescue package.
This morning, Gold hit a record high above $1,620 an ounce, while the dollar steadied and Asian stocks slipped as investors piled into bullion over fears of a possible U.S. debt default as the debt ceiling talks in Washington stalled.
Last week, global markets fell early in the week on Greek default concerns and fears that the US debt ceiling would not be raised. This all turned around on Thursday when EU leaders agreed to inject 109bn euros (£95.9bn) into the Greek economy with more from the private sector in the coming decades. Investors also became optimistic that US policymakers would reach an agreement to raise the US debt ceiling in time.
Commodities gained last week as precious metals such as gold and silver were purchased as safe havens. Oil also hit a three week high on optimism that Europe was tackling its huge debt problem while agricultural markets rallied on worries about the impact of excessive summer heat on crops.
This week, US corporate earnings should continue to be positive but markets may still fall if no comprise is reached to raise the US debt ceiling.
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