Europe and Britain
The London FTSE, Frankfurt DAX and Paris CAC rallied last week. The DAX and CAC reversed losses of the previous week, which were triggered by the ECB's decision to leave interest rates unchanged. Investors had been looking for a rate cut to boost their ailing economies. The FTSE posted its second consecutive weekly advance as companies beat analyst estimates and forecast better earnings. The FTSE rose 1.4 percent for the week, adding to last week's 0.9 percent climb. The CAC has rebounded since the start of October, boosted by expectations that restructuring at some of France's most high-profile companies was starting to bear fruit and that the economy at large would soon show signs of improvement, possibly with a helping hand from the European Central Bank (but they are still waiting for that.).

The joke goes, Why should investors invest in France? Because it's not Germany! However, a deteriorating economy has hit industries across France and the fact that other countries are worse off offers little encouragement. Investors continue to look for a spark from the United States rather than from French business leaders and politicians. Until they see signs of a turnaround in the U.S., investors expect that France and the rest of Europe will be going nowhere very slowly.

Asia
Despite a better-than-expected third quarter gross domestic product report, stocks in Japan continued to slide. (See indicator scoreboard below.) But the good GDP news had to be balanced with the government's latest assessment of the economy. In the report, the government lowered its outlook for the first time in a year. Investors continue to wait for government plans to bail out banks and the economy as a whole. Equities bounced upward on Friday from near 20-year lows thanks to the better-than-expected U.S. retail sales report.

On Thursday, the Nikkei closed below the Dow Jones Industrial Average for the first time since February. Investors said the lack of government action to help banks clean up bad loans may force the Bank of Japan to keep monetary policy steady. Japanese Prime Minister Junichiro Koizumi may call next week for about ¥5 trillion in new funds to cover tax shortfalls and help boost the economy. A record 28 publicly traded companies have failed so far this year. The nationalization of the weakest banks is widely speculated.

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

The Bottom Line   •   Looking Ahead