Monday, 12 November 2012

Markets fall in wake of US elections amid mixed economic data

Stock markets performed negatively last week.

In his market commentary, Doug Short noted that all eight indices that he tracks finished in the red last week. He noted that Japan's Nikkei 225 and Hong Kong's Hang Seng were the worst performers, losing over three percent, with the former falling back into the bear zone.

“The US presidential election took center stage of the world news media, and obviously the reelection of Obama was not what the market wanted,” he wrote.

Erik Swarts also noted the weak market performances but “found little merit in pinning the perceived surprise of short term market gyrations to an event as protracted as the US presidential elections”. Instead, he thinks that “the weakness in equities this past week was the byproduct of ongoing asset kinetics set in motion long ago”.

See his article for some charts of how several indices have been following the arcs of previous peaks.

Investors relying on economic data would have been given mixed signals last week.

In the US, the preliminary Thomson Reuters/University of Michigan consumer sentiment index for November showed a five-year high and exports hit a record in September.

In China, reports last week showed that industrial production, retail sales and fixed-asset investment all accelerated in October. A report over the weekend showed that exports rose 11.6 percent in October from a year earlier, up from 9.9 percent in September, while imports rose 2.4 percent.

However, European and Japanese reports last week showed continuing weakness in these economies.

In the euro area, Markit's composite index based on surveys of purchasing managers fell to 45.7 in October from 46.1 in September, staying well below the 50 mark. Other reports last week showed that retail sales in the euro area fell in September and German, French and Italian industrial production all fell in September.

In Japan, the index of coincident economic indicators fell in September for the sixth consecutive month. There is little respite in sight for the Japanese economy as the leading index also fell in September for the fifth month in six while the diffusion indices from the economy watchers survey and the consumer confidence index all fell in October.

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