Another fraught week, despite the last three or four of gains in financial markets.
We once again have to fly alone, putting our trust in the EU and eurozone leaders, finance ministers and their advisers to get it right at last.
A big ask and one made bigger by the fact that a one day summit has turned into two (the second part is on Wednesday).
There’s no certainty of a deal being struck that will once and for all convince everyone that Europe can handle its sovereign debt and banking crises.
Europeans have had the best part of two years to do, have claimed at least twice to have struck ‘shock and awe’ agreements that would defend the eurozone, the euro and the banks, only for it all to crumble in a welter of disagreements political incompetence and pollyannish thinking that it will all "be right".
And while this was happening, Greece added to the mess by dragging its feet, arguing and trying to avoid the inevitable and the economy slid into deep recession.
Bailouts for Ireland and Portugal became necessary, Spain and then Italy became the target of market unease and growing concerns and credit rating downgrades were handed out like admission slips to the sick man of Europe club.
Given the track record of the EU and the eurozone over the last two years, it’s still a wonder that markets still rally on news of the latest ‘deal’ agreement or talks, but that’s what they have done for the past month.
In effect they have "bought hope" and nothing more substantial, while suspending their collective disbelief.
This week will be no different, after last week’s gains, small as they were in many cases.
US shares jumped sharply on Friday, lifting two major indexes into weekly gains.
Why? Optimism ahead of the European Union summit, better than expected economic data, and McDonald’s Corp quarterly profit on Friday which helped investors ride the bullish momentum to the close.
Let’s hope the first day of the summit goes well otherwise there are going to be a lot of upset folk who may be tempted to take their recent profits and run tonight.
In New York the Dow ended up 267.01 points, or 2.3%, at 11,808.79 on Friday.
The index climbed 1.4% for the week for its fourth-straight week of gains — the longest stretch since January.
The S&P 500 added 22.86 points, or 1.9%, to 1,238.25. It rose 1.1% for the week, its third weekly rise in a row.
That was the S&P’s longest rally since February.
The Nasdaq Composite ended up 38.84 points, or 1.5%, at 2,637.46, but it slid 1.1% for the week, its first down week in three.
For Australian shares, the strong close in New York left local shares poised to rise when trading resumes this morning after the SPI closed with a gain of more than 1% or 45 points, to 4201.
The MSCI Asia Pacific Index fell 0.7% last week, with losses for most major markets.
The Nikkei fell 0.8% in Japan, Australia’s ASX 200 dropped 1.5 %, Hong Kong’s Hang Seng Index slid 2.6% and China’s Shanghai market lost a nasty 4.7% and gave up most of the previous week’s gains.
Bangkok’s SET Index lost 4.1% as the worst flooding in 50 years shut factories and disrupted supply chains, including the huge Japanese export car sector.
Only South Korea’s Kospi index had a good gain, up 0.8% and all of that came in Friday’s gains of 2%.
The Australian dollar also picked up, rising to $US1.0375, about steady on a week earlier.
But the Aussie jumped from its $US101.55 cents close on Thursday in Sydney.
The rise was after the US dollar was sold off Friday amid the feeling of optimism about Europe and the US economy which saw some economists lift their estimates for third quarter growth to as much as 3% (annual).
That report is out this Thursday night, our time.
The greenback hit a new low record low against the yen, touching 75.78 yen, surpassing its previous record low of 75.941 set in August, bringing back into focus the threat of official intervention to weaken the Japanese currency.
Against the dollar, the euro rose 0.5% to $US1.3846, having hit $US1.3900.
But the euro fell against other major currencies.
In Europe markets were wary for most of the week.
And that was reflected in the small gain for the Stoxx Europe 600 Index which added just 0.2% last week and Bloomberg said markets rose in nine of the 18 western European markets.
London’s FTSE 100 added 0.4%; Germany’s DAX Index gained less than 0.1%.
France’s CAC 40 dropped 1.5% because of worries about French banks and the capital needs and the country’s credit rating.
In commodities, gold advanced more than 1.8% on Friday night to end at $US1640 an ounce, while oil futures were 1.8% higher at $US87.65 a barrel.
Comex gold futures finished more than $23-an-ounce higher Friday to end a four-session losing streak.
Gold for December delivery added $23.20, or 1.4%, to settle at $US1,636.10 an ounce in New York, trading as high as $US1,649.60 an ounce and as low as $US1,612.80 an ounce.
It further rose in after hours trading to settle around $US1,643 an ounce.
That was after the sharp 2.1% fall on Thursday.
For the week, gold futures lost 2.8%.
