Britain and Europe
The London FTSE, Paris CAC and Frankfurt DAX were, for the most part, upbeat last week despite some mixed economic news. Investors, who had been focusing on sinking earnings news, reversed direction and took "the cup is half full approach" to some key company earnings statements. Market players decided that a floor was developing for some technology companies and the worst could be over. With inflation easing in the EMU, investors are hoping that the ECB returns from vacation ready to act and cuts interest rates on Thursday.

Asia
The Japanese Nikkei and Hong Kong Hang Seng were pummeled last week for different reasons. The Hang Seng lost ground and fell to a 29 month low because of problems in the telecommunications sector, where investors are particularly concerned about price competition and weakening profit margins. China Mobile in particular has been pressuring the index downward because of its huge presence and endless stream of problems and bad news. A Fed interest rate cut generally is a cause for celebration in Hong Kong because of the link between the Hong Kong and U.S. dollars. An interest rate cut in the United States means an automatic interest rate cut in Hong Kong. But lower rates still haven't improved the bleak outlook for exports to the United States. On the week, the Hang Seng lost 5.5 percent and is down 25.4 percent since the first of the year.

The Nikkei continued to bounce around longtime lows on concern that corporate profits won't recover anytime soon. Japan's banking stocks, however, rose on hopes the U.S. interest rate cut will improve the prospects for a global economic recovery and a paring back of their bad loans. Analysts say that a recovery in the U.S economy would be an important plus for the Japanese markets. Unless there is a recovery, banks will be in increasing jeopardy as they write off their mountain of bad loans. Stocks rallied briefly on a report the government may water down plans to restrict banks' shareholdings; banks wouldn't have to sell as many shares as before to reduce their reported value to meet government levels, which would likely limit further drops in key indexes. On Friday, the Nikkei dipped below 11,100 for the first time in 17 years and the stream of weakening economic indicators continued unabated.

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

The Bottom Line   •   Looking Ahead