By Anne D. Picker, International Economist, Econoday
Monday, December 2, 2002

The link to the U.S. for overseas investors was never more evident than in their reactions to Wednesday's economic data. Better-than-expected reports for manufacturing and employment sent equity investors' hopes into orbit and they bought stocks with wild abandon. (The exuberance carried over to Thursday in Japan.) One month's data does not make a trend - and the Federal Reserve's Beige Book, which was released later on Wednesday and indicated that the economy continues to grow at a tepid pace, certainly did not justify the flight to exuberance. But many U.S. investors already were preparing for Thanksgiving turkey and concentrated on the pre-holiday good news instead. The dollar rose also, although it did lose some of its gains in holiday thinned overseas trading on Thursday and Friday.

Two months into the fourth quarter and all indexes followed here with the exception of the Nikkei and Topix show improved performance on dismal third quarter numbers. (See recap of global markets below). Both Japanese indexes, however, almost recovered as investors swallowed up exporters' stocks. The Nikkei vaulted up 300 points on Thursday alone thanks to upbeat U.S. data. On the week, only the Singapore Straits Times fell (down 2.3 percent), while the FTSE and DAX barely slipped - 5 and 0.6 points, respectively. The others rose anywhere from 0.1 percent (Hong Kong Hang Seng) to 5.8 percent (Mexican Bolsa).

The South Korean Kospi has rebounded from October lows and is above year-end 2001 levels. Shares ended at a nine-week high on Friday, spurred on by improved economic data at home and in the United States. Technology, steel and banking stocks led the rally as investors bought on hopes that a sustained improvement in the U.S. would boost demand for exports. The Kospi is at its highest level since September 12th and is now up 4.5 percent on the year after dipping into negative territory during October. South Korea's economy was hit by uncertainty during the third quarter amid signs that a boom in consumer spending was slowing and fears that a rebound in exports might be losing steam. Gross domestic product growth slowed to 5.8 percent in the third quarter when compared with last year from 6.4 percent in the second. But there are signs that the fourth quarter might be stronger based on a faster-than-expected jump in industrial output. And optimism has been strengthened by solid U.S. economic news.

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

The Bottom Line   •   Looking Ahead