Recap of Global Markets
Europe and Britain
Stocks in London and Europe seesawed throughout last week. And although equities slipped in London, hopes for stronger U.S. economic growth lifted those stocks most exposed to North American markets. They were pushed higher in the expectation that the recovering dollar will boost their earnings. European stocks increased for a second week, led by companies such as Nokia and Royal Philips Electronics NV. On Thursday, the DAX finished at its highest level since last September, while the CAC closed at its highest level in nine months on Friday.

Asia
The Nikkei 225 stock average aborted a widely expected August slide after just one week, and has instead risen to towering new heights, closing over 10,000 on Monday for the first time in a year. The Topix index followed suit on Wednesday by breaking through 1,000. News that Japan's gross domestic product grew by 0.6 percent in the second quarter - three times more than expected by analysts - provided the final lift needed to take the indices over the top. The groundwork for the latest surge was provided by rising business confidence, profits and corporate investment in Japan, together with an ever-reliable stream of exports that is getting a friendly boost from government intervention to stop the yen from strengthening.

But even before positive economic factors emerged, foreign investors began prowling for cheap stocks in April when the Nikkei was below 8,000. Many buyers were betting that Japan would have to catch up with overseas markets that were already climbing. But analysts say the Tokyo market could be held back by the same two factors that were blamed for its miserable performance earlier in the year. Banks continue, under government orders, to sell their cross-held shares. And employee pension funds are still dumping equities as they prepare to hand some of their assets back to the government. Even those Japanese institutions not under obligation to sell still remain wary of the current rally. Foreigners dominated buying, but at the start of August and for the first time this year more cautious retail investors moved in, becoming net buyers of investment trusts.

The other Asia/Pacific indexes followed here have also been on a tear since April despite problems such as SARS and its devastation of local economies. Investors in these markets continue to keep a hopeful eye on the engine of all growth - the United States.

South Korea plunged into its first recession since the 1998 Asian financial crisis after the government reported a second consecutive quarter of contraction. The economy shrank by 0.7 percent in the second quarter from the previous quarter, when it contracted by 0.4 percent. Although the economy grew by 1.9 percent from a year ago, it was still the slowest quarterly growth in nearly five years. The poor performance reflected weak corporate investment, a slowdown in consumer spending due to increased household debts, and sluggish exports caused by anemic global demand and the SARS outbreak. The weakest sector of the economy remained private consumption, which accounts for half of GDP. Uncertainty caused by labor strife and the North Korean nuclear crisis added to uneasy consumer sentiment. Despite all this, the financial markets are expecting a recovery, with the Kospi hitting a new 13-month high Friday on hopes of increased technology exports to the U.S.

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

The Bottom Line   •   Looking Ahead