Monday, August 4, 2003
Last
Week's Highlights
ECB
sits tight
As expected, the European Central Bank Governing Council
left its policymaking interest rate at 2.0 percent. It
had lowered the rate by 50 basis points at its June 5
meeting. The 2.0 percent rate is the lowest among any
of the 12 nations sharing the euro since at least 1948,
when Europe first received money from the Marshall Plan.
The ECB has an inflation ceiling of 2 percent. Growth
in the eurozone has been miserable, with Germany, Italy
and France teetering on the brink of recession. The appreciation
of the euro against the dollar and pound is hurting exporters,
whose products become less competitive.
The
ECB's Governing Council approved Jean Claude Trichet to
be their next president, succeeding Wim Duisenberg. Trichet's
appointment will still need approval from several others
in the European Union hierarchy. On September 11, the
EU Parliament's Economic and Monetary Affairs Committee
will hold a hearing and vote on the nomination. The full
EU Parliament is expected to give its final approval to
the nomination a week later. EU leaders are expected to
give final approval to the nomination at their summit
meeting on October 16 and 17. Trichet would then take
office on November 1.
The
choice of Mr. Trichet, made as far back as 1998, has been
highly controversial given his involvement in a three-year
high-profile corruption case in France involving Credit
Lyonnais. Trichet was cleared of any wrongdoing in June
and was subsequently endorsed by a string of eurozone
governments. From the beginning, he has been Duisenberg's
heir under a Franco-German deal to share power. He might
have taken over earlier had it not been for the investigation.
Mixed
week but good month for stocks
Stock performance was mixed last week as investors absorbed
key earnings reports along with important economic data.
But the week ended on a distinctly sour note as the U.S.
employment report didn't deliver the magic bullet that
investors were hoping for. Improvement that has been sighted
elsewhere in the economy has yet to reach the labor market.
Despite a lower unemployment rate, employment continued
to sink as people became too discouraged to look for work.
Even though employment is a lagging indicator, worries
persist that this could be a jobless recovery with jobs
being shifted to lower cost markets overseas. On the week,
decliners outnumbered those that increased by a margin
of eight to five. The Hang Seng and Kospi outperformed
everyone last week.
All
equity indexes followed here were at higher levels at
July's end. Gains for the month ranged from 2.8 percent
for the Dow to 8.3 percent for the DAX.
Earnings and Economics
