The Australian stockmarket will open weaker today as investors eye the latest surge in oil prices, which threatens the gathering rebound on global markets.
Other commodities prices, such as gold, copper and silver rose 3% or more last week, US markets were up less than 1%, Europe and Asian markets made modest gains, but Australia has its strongest week in 12 weeks (going back to last December) with a 2.6% gain.
Oil prices jumped more than 6% last week, with big gains being reported in the major markets in London (Brent style crude) and New York (WTI type crudes).
Overnight trading Saturday morning saw the SPI futures contract end with a 7 point loss, pointing to that early weakness.
The Aussie dollar rose, then slipped back under the $US1.07 mark in New York to end at $US1.0693.
But the close early Saturday still represents a jump of 1.5 USc from Thursday’s close in Australia, a significant gain.
Friday saw the ASX 200 break through the 4,300 point resistance level for the first time since early December, finishing up 20.6 points, or 0.48%, at 4,306.8 points.
The broader All Ordinaries index added 21.5 points, or 0.5%, to 4,389 points. It rose 2.7% for the week.
But will it last with markets finally starting to worry about higher oil prices, especially in the US?
Analysts say the increasing concerns about oil price, Iran, and the impact in the US in particular, will worry markets going into the rest of the week with some imports tests of sentiment, especially from Chinese, European and US manufacturing.
In the US on Friday, the S&P 500 closed at its highest level since June 2008, before the collapse of Lehman Brothers in September 2008, as more data was released suggesting confidence in the economy were not misplaced.
For the week, the Dow and S&P rose about 0.3% and the Nasdaq added 0.4% to close at its highest since mid-December 2000 (despite weak profit reports from Dell and Hewlett Packard).
The S&P 500 is up 8.6% this year so far, but last week’s gains weren’t as confident as the week before.
Consumer confidence hit its highest level for a year or more, new home starts weren’t solid, but they weren’t the disaster they were at times in 2011.
But all market commentaries mentioned the gathering concerns about the impact rising oil and petrol prices might have on the rebound, and on Europe where the economy is projected to dip into a shallow recession this year.
However there are some positives coming.
The euro hit its highest level in more than two months against the dollar on Friday, and hit its strongest versus the yen in nearly four months.
The yen continues to fall, bringing some small relief to Japanese companies being strangled by the high value of the currency, and consumers being hurt by deflation.
The European Central Bank is expected to make available another round of cheap money on Wednesday: the first round of 489 billion euros of three year loans helped settle the eurozone last December and this will do the same as Greece struggles towards either a bailout deal, or default.
Estimates suggest that the refinancing operation would draw bids of anywhere between 500 billion and 1 trillion euros.
In Asia, markets were generally firmer.
The MSCI Asia Pacific Index rose 0.8% last week, its 10th straight week of rallying which has lifted it 9%.
Besides Australia’s solid rise, China’s Shanghai market jumped 3.5% last week, and is now up around 11% for the year so far.
China’s main stockmarket is now at its highest level since the middle of last November.
The cut in bank asset ratios (which will allow banks to lend more, especially to small companies) last weekend helped improve sentiment.
But the Hong Kong market didn’t gain, slipping 0.8% last week as the mainland gains failed to spill over.
South Korea’s Kopsi fell 0.2% over the week.
And the Tokyo market had another strong week as the yen continued to fall in the wake of the Bank of Japan adopting more positive measures to attack deflation.
The yen has been falling now for around two weeks (since the central bank announced its decision and more spending a fortnight ago tomorrow).
The Nikkei closed up 2.8% last week and is up around 6% since the Bank of Japan announcement, against a 1.6% rise in markets outside Japan in the past two weeks.
In Europe, the continuing uncertainty about Greece’s fate and concerns about oil prices (and Iran) saw markets go sideways or finish with small gains.
The Stoxx 600 Index fell 0.4% last week to 264.77 after reaching 268.16 on Monday, the highest level since July 26.
The index was up 23% by Friday from the low last September and 8.3% this year (similar to the S&P 500 in New York).
Markets fell in nine of the 18 western- European economies.
France’s CAC rose 0.8%, as did Germany’s Dax. London’s FTSE 100 added half a per cent.
Gold prices dipped on Friday, ending three days of gains and despite more weakness in the US dollar.
Silver also fell on the day, but rose on the week, while copper rose for the day and had a strong week.
Comex April gold for April fell $US9.90, or 0.6%, to end at $US1,776.40 an ounce in New York.
On the week, gold jumped $US51, or 2.9% as those fears about Iran
