By Anne D. Picker, International Economist, Econoday
Monday, July 7, 2003

Last Week’s Highlights

The Reserve Bank of Australia left interest rates unchanged at 4.75 percent, signaling that it is more concerned about spiraling house prices than the slowing economy or the Australian dollar’s biggest quarterly gain in 20 years. The dollar rose to a five-year high on the news. In the past, the central bank has warned about the danger to the economy of rising debt, the result of increased borrowing to buy property in a booming housing market. Sydney home prices have risen by as much as 50 percent the past six months. The central bank, which has not changed interest rates for the past 13 months, doesn't release a statement explaining its decision. Both Australian bonds and stocks declined after the action. Australia's benchmark rate is 3.75 percentage points above the U.S. Fed funds rate of 1 percent. The European Central Bank lowered its key rate by 50 basis points to 2 percent in June.

Equities were skittish last week. End of second quarter and beginning of third quarter positioning muddied the market, as did combined holidays in Canada and Hong Kong on Tuesday and the U.S. on Friday. The Nikkei and Topix soared mid-week after the Bank of Japan’s Tankan sentiment survey results weren’t as terrible as analysts expected. On the week, four of the indexes followed here ebbed lower while the rest climbed.

Last Week's Highlights   •   Global Stock Market Indexes   •   Recap of Global Markets   •   Currencies   •  Indicator Scoreboard

The Bottom Line   •   Looking Ahead