All equity indexes with the exception of the Shanghai Composite declined last week as investor trepidations about growth resurfaced. Asian economic data were virtually non-existent while U.S. data continued to show stabilization but not growth. UK data depicted a struggling economy while U.S. data were mixed. Commodity prices continue to gyrate as traders contemplated growth probabilities and their impact on demand. The trajectory of the Chinese economy and its voracious appetite for commodities has become increasingly intertwined with whether higher commodities prices are justified by supply and demand factors.
A key reason for last week’s poor equity performance was uncertainty about financial sector regulation. Proposals for sweeping reforms in the U.S. were swiftly followed up with calls from the Bank of England’s governor for much tighter regulation while the Swiss National Bank called for powers to break up banks thought to be “too big to fail”. The nervousness was heightened when Standard & Poors lowered its credit ratings on a number of U.S. banks and the Obama administration unveiled plans to overhaul financial regulation.
On the week, all indexes followed here were down with the exception of the Shanghai Composite. Losses ranged from 1.7 percent (Nasdaq) to 6.3 percent (SET). Both the FTSE and Dow dropped below their yearend level.
Source: Barrons Econoday