Europe and Britain
Equities were volatile as concerns about the impact of the Enron debacle depressed investors on Monday. But by midweek, the FTSE 100, Paris CAC and Frankfurt DAX soared as optimism about the incipient U.S. recovery caught investors' imagination. The markets continue to move on U.S. news, follow U.S. markets' enthusiasms and go along for the ride. Wednesday saw a surge but by Thursday the indexes were much more restrained. Part of the explanation for market volatility was the rebalancing of the MSCI indexes on November 30. The changes probably created imbalances in the portfolios of fund managers that mimic the MSCI. Dealers also said that fund managers are frightened of being left behind by the market in any pre-Christmas rally.

Asia
Asian equities indexes followed here continued to turn in positive results as investors anticipated increased exports and potential profits from the expected U.S. recovery. Friday's disappointing U.S. employment report release occurred after Asian markets were closed for the week. Despite Moody's downgrade of Japanese debt, the Nikkei rose 0.9 percent on the week.

Japan wiped two of the past decade's three recessions from the history books after revising years of gross domestic product statistics. A new method of accounting for seasonal adjustments erased a two- quarter contraction (the standard definition of recession) in the second half of 1993 and another a year before that. The economy contracted in the first two quarters of 1998, according to the revised data. It is not the first time Japan has rewritten its recent economic history - and made things look better. Last year the government adopted new accounting standards that cut what had been the country's longest post-war recession in half. The latest revisions prove a well known fact: That bureaucrats themselves are not very confident in their quarterly estimates. (See indicator scoreboard.)

Two of the best performing indexes followed here are the Australian all ordinaries, which are up 3.9 percent on the year, and the South Korean Kospi, which has soared 27.6 percent after losing 50 percent of its value in 2000.

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

The Bottom Line   •   Looking Ahead