By Anne D. Picker, International Economist,Econoday
Monday, October 29, 2001

Equities investors regained their positive focus last week and all indexes tracked here reversed their previous week's losses to post healthy gains. The Australian all ordinaries, South Korean Kospi and Mexican Bolsa are all higher than they were at 2000's end. The dollar resumed its climb especially against the euro, pound sterling and yen as foreign exchange traders decided that the U.S. economy would revive faster than Europe and Japan. Britain continues to outpace everyone on growth. Despite this, the pound sterling continues to be dragged down by the euro as traders impatiently await word about Britain's entry into the European Monetary Union.

The European Central Bank once again left their policymaking interest rate at 3.75 percent. After a brief foray into cutting interest rates in the aftermath of September 11, they have returned to their seemingly narrow focus on inflation. The Bank's two pillars of monetary policy remain above proscribed limits. Inflation as measured by the harmonized index of consumer prices remains stubbornly above the ECB's 2 percent ceiling and M3 money growth continues to exceed the 4.5 percent target.

In stark contrast, the Bank of Canada lowered its key policymaking overnight interest rate by 75 basis points to 2.75 percent. The bank rate is now 3 percent. The Bank said it cut the rate because of the pronounced slowdowns in the Canadian and global economies over the summer and especially since September 11. The interest rate cut was the eighth this year for a total reduction of 3 percent so far and was intended to support economic growth and to keep inflation close to 2 percent.

Introduction   •   Global Stock Market Indexes   •   Recap of Global Markets   •   Currencies   •  Indicator Scoreboard

The Bottom Line   •   Looking Ahead