Markets had a far better week last week than in the previous four.
For example, Wall Street posted its first weekly gain in more than a month as Fed Chairman Ben Bernanke raised hopes for more stimulus for the US economy at the central bank’s September meeting.
Bernanke spoke at a central bankers’ meeting in the US on Friday and didn’t say anything directly about a new round of stimulus.
Bernanke, speaking in Jackson Hole, Wyoming, said the central bank’s policy panel would meet for two days in September instead of the scheduled one-day meeting to discuss any more stimulus.
While expressing long-term optimism, Bernanke said the Fed found recent developments troubling and saw inflation as staying low.
He stopped short of detailing further monetary policy action to bolster the ailing economy, but said the central bank would consider what more it could do to fight high unemployment.
He indicated that the Fed would use all its "tools” to help the economy, which the market concluded that the Fed would so something (just what that means we will have to wait until the post meeting statement next month).
Not even the cutting of second quarter economic growth in the second estimate (out on Friday) to an annual 1% (from 1.3% in the July reading) bothered investors in the end.
That was probably due to the nature of the revisions in the GDP report which were more encouraging for the outlook of the US economy than the headline report suggested.
Revised business spending was higher, unsold stocks were lower, personal income and spending a touch better and domestic final sales (a good measure of demand in an economy) was revised up to 1.1% (annual) from 0.5% in the first estimate.
Investors ignored all of that and focused on Mr Bernanke’s comments.
As a result they looked at the most optimistic bits of his speech and sent Wall Street higher.
The Dow ended up 134.72 points, or 1.2%, at 11,284.54.
The Standard & Poor’s 500 Index was up 17.53 points, or 1.5%, at 1,176.80 and the Nasdaq Composite Index was up 60.22 points, or 2.5%, at 2,479.85.
For the week, the Dow rose 4.3%, the S&P gained 4.7% and the Nasdaq jumped 5.9%, shaking off fears sparked by the surprise resignation of Apple legend, Steve Jobs.
In Australia, the market looks like opening higher this morning with the SPI futures index up 21 points to 4218 at the end of trading early Saturday morning.
Unlike the US, Australian shares ended the week with a loss on Friday, down 12.8% on the ASX 200 at 4200 and off 9.5 points on the All Ords which ended at 4271 points.
For the week, the market was up more than 2%.
The Australian dollar rose on the back of positive market reaction to Reserve Bank Governor Glenn Stevens’ upbeat and confident view of the economy on Friday.
At the local close on Friday, the dollar was trading at $US104.99, up from $US104.56 on Thursday.
But by the close in New York early Saturday it had jumped to $US1.0573, a rise of more than a cent in 24 hours and well over 1.5 USc in the week.
In the rest of Asia markets mostly finished up for the week.
The MSCI Asia Pacific Index rose 0.7% last week, its first gain in five weeks after losing 14% in the preceding four.
The Nikkei rose 0.9%, despite an impending change of prime minister later today and Moody’s downgrading of Japan’s sovereign-credit rating during the week.
South Korea’s Kospi Index ended 2% higher, Hong Kong’s Hang Seng Index rose 0.9% and Shanghai’s Composite Index added 3.1% after the reasonably good early reading on the health of China’s huge manufacturing sector.
The ASX 200 Index jumped 2.4% after being down 3.5% and Singapore’s Straits Times Index rose 0.5%.
In Europe, Greece is worrying markets again as an argument over a deal it struck with Finland on lending and collateral threatens to sink the 109 billion euro bailout.
As a result the country’s stockmarket plunged to a 15 year low late last week and bond yields soared to their highest levels ever, 18.85% on Thursday for the 10 year bond and over 43% for the two year security.
Silly rates, but a big signal that the bailout of Greece is once again edging close to collapse.
As a result, Greece’s ASE index lost 8.5% last week.
Shares in the National Bank of Greece, the country’s largest lender, slid 25%, the biggest drop since 2008. Alpha Bank SA shares lost 26% and EFG Eurobank Ergasias shares fell 22%.
But across Europe the dragged markets rose for the first week in five.
The Stoxx 600 Europe Index advanced 1.1% to 225.52 this past week.
Bloomberg said markets rose in 15 of the 18 major western European economies.
France’s CAC 40 rose 3.1%, the UK’s FTSE 100 added 1.8% and Germany’s DAX was up 1.1%.
The Swiss Market Index jumped by 4.5%, the best gain in 18 months.
The Dax ended with a gain despite more weakness on Friday after that still unexplained 4% fall in 15 minutes on Thursday.
(It ended that day down 1.7% and lost another 0.8% on Friday.)
In commodities oil rose for the first time in five weeks, gold was mixed to a bit dented by the week’s sell down and The London Metal Index of prices for six metals including copper and aluminium rose a solid 2.5% last week as
