Market reactions can be unpredictable. There are times markets rally on the worst of news. At other times, what seems like good news is interpreted as problematic, causing markets to slump.
Last week’s European Council Summit surpassed the low expectations of investors.
What a ride on markets last week. Initially, investors gave the thumbs-up to the €100 billion Spanish bank bailout. But euphoria quickly shifted to concern.
May was the worst month this year for global equity markets, and the usual suspects are to blame.
The biggest news last week was the much-hyped IPO of Facebook; throughout the week, both the IPO price and the number of shares offered crept higher, suggesting the investment bankers may have positioned the deal too aggressively.
The lonely letter “x” marked a clear message for Europe’s political leaders in last weekend’s elections. French politics moved decidedly to the left, which will likely create turmoil in the Franco-German relationship and the delicate balance between growth and austerity. In Greece, voters couldn’t exactly agree on what they wanted but they spoke loudly and clearly about what they did not want.
The old Wall Street mantra has worked pretty well in the last couple of years but the jury is still out if you go back a few more years.
Although the global economy appears to be recovering, investors were reminded this week that growth does indeed remain tepid and the recent economic momentum markets have enjoyed can wax just as easily as it can wane.
Wow! What a busy week. Things started poorly for investors as markets violently adjusted to the prospect of slower global economic growth. China cut her 2012 economic growth target and Europe reported its economy shrank in the fourth quarter last year. Greece also weighed with the lack of progress on the Private Market Initiative (PMI) to swap existing bonds for new bonds.
At last, the Greek austerity negotiations and debt swap marathons concluded, but equity and bond markets reacted quite differently to the news.