By Anne D. Picker, International Economist, Econoday
Monday, December 23, 2002

Happy Holidays!
We will be enjoying a break between Christmas and New Years and will return on January 6, 2003.

Investors tried to end the last full trading week of the year on an upbeat note. But market unease was very much evident as events continued to spiral toward a decision on Iraq. The dollar sank on the question while the equity markets also acknowledged concern. Lower earnings forecasts in the U.S. had a direct impact on Asian stocks because so much rides on the strength of the U.S. economy. Traders said that the heightened war rhetoric was also weighing on stocks globally as investors prepared themselves and their portfolios for war. And with the holidays approaching, many traders moved to the sidelines, preferring not to take too much risk in markets that are less liquid and thus more difficult to trade.

The dollar tumbled to a three-year low against the euro and slid against the yen as the market tightened its focus on the prospects of war with Iraq. The U.S. found fault with Baghdad's weapons declaration, stoking worries that Washington is intent on attacking Iraq soon. Investors fretted about the huge financial costs of a war and worried the U.S. might become more vulnerable to new terrorist attacks.

As the last full week of trading wound down equities followed here were decidedly mixed. Most indexes rose on Friday but not enough to offset midweek losses. Seven indexes rose anywhere from 0.1 percent (NASDAQ) to 1.3 percent (Australian all ordinaries). On the minus side, declines ranged from 1.3 percent (Nikkei) to 2.2 percent (Singapore Straits). Only one index - the South Korean Kospi - is higher than its 2001 close.

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