Daily Market Review 25/11/2011
Asian stocks hit a seven-week low on Friday on worries of a credit crunch as European policy makers fail to find any tangible solution, driving investors to safety-linked assets. European shares extended their losses today and set to post their biggest weekly loss in two months. The FTSEurofirst 300 index was down 0.2%, with cyclical miners being on the top of the loserboard. The UK blue-chip index closed in negative territory, about 12 points at 5,127 on thin volumes, for a ninth day in a row on Thursday, extending its longest losing streak since 2003. Unless Merkerl, Sarkozy and newly appointed Italian Prime Minister Mario Monti manage to convince investors that the euro crisis is being effectively managed by the European leaders, European shares are likely to reach new low-records.
In the forex market, greenback is gaining against its counterparts, with many of the basic currencies being about to test the key October lows against the US Dollar. The Euro hovered near a seven week low versus the dollar in Asia on Friday, dragged by deepening worries over the euro zone debt crisis. Any rally is likely to be capped ahead of an eventual retest of the 1.3142 October low. In the commodity markets, the yellow metal edged down, heading for its second week in negative territory, as investors prfer to cash in order to cover losses triggered by the euro crisis in other markets. Spot gold is trading at $ 1,673 at the timing of writing, down from a lifetime high around $ 1,920 in September.
The economic calendar is thin on the ground today, with only some secondary data due out of France and Italy, that are not likely to affect significantly the price action. In the coming weeks all eyes will be fixed on the actions of Germany and of the ECB as the German resistance to controversial euro bonds is shrinking. However it looks like that either via Eurobonds or through the ECB, the Germans will have to pay the bill.