Global markets advance on the week
Global stock markets moved higher this week, driven largely by speculation over whether the U.S. Federal Reserve would announce further stimulus for the U.S. economy. Fed Chairman Ben Bernanke made a much-anticipated speech Friday, and after some initial hesitancy, markets responded well to Bernanke’s comments.
Global stock markets moved higher this week, driven largely by speculation over whether the U.S. Federal Reserve would announce further stimulus for the U.S. economy. Fed Chairman Ben Bernanke made a much-anticipated speech Friday, and after some initial hesitancy, markets responded well to Bernanke’s comments.
Even though no new action on the economy was announced, investors appeared optimistic that the Fed Chairman was leaving the door open to potential future stimulus. The Federal Reserve “is prepared to employ its tools as appropriate to promote a stronger recovery,” Bernanke said in his speech. His comments helped stock markets end the week on a positive note.
Earlier in the week investors bought into beaten down stocks, such as those in the U.S. financials and technology sectors, and began backing away from safe haven assets such as gold. The price of bullion, which had recently risen quickly to a series of record highs, experienced its largest one-day drop in more than three years before recovering somewhat in price.
There was some positive economic news during the week, including better-than-expected manufacturing data from China and Europe and stronger-than-expected durable goods orders in the U.S. On the other hand, U.S. second quarter GDP was revised lower, to 1% from the initial 1.3% estimate.
Canada’s financials sector attracted attention as bank earnings reported over the week were largely positive. Industrials and materials stocks benefitted from some lessening of global economic fears.
In other news this week:
•Canadian retail sales rose by 0.7% in June over May.
•Warren Buffet announced a US$5 billion investment in Bank of America through Berkshire Hathaway Inc. The move is intended to shore up confidence in the largest U.S. bank.
•Moody's Investors Service cut its rating of Japan's government debt.
•Short-selling bans on select European bank stocks were extended until the end of September in an attempt to stem excessive volatility.
•New U.S. single-family home sales fell to a five-month low in July.
•U.S. markets awaited the possible impact of Hurricane Irene as it threatened the east coast of North America. Airline stocks fell as companies prepared to cancel flights.
For a look at what’s ahead for next week:
