So much for the outbreaks of doom and gloom in Australia, China, the US and parts of Europe last week about economic growth, jobs, central banks, the impact of winter, the loss of the car industry in Australia, and fears about the stability of emerging markets.
Global markets in fact ended with some of the strongest gains seen for quite a while and many are now back in positive territory for the year.
Gold rose 4.4% last week and sliver also rose sharply, up 5%, while oil edged higher as the US dollar weakened.
US shares gained 2.3%, Eurozone shares rose 2.7%, Japanese shares rose 1.1%, Chinese shares gained 3.5% and Australian shares rose 3.7%.
A good inflation report from China helped boost Asian markets on Friday, especially Australia.
The usual mid-month update on Chinese manufacturing later this week will drag China back to centre stage once again, especially in Australia for shares and the dollar.
Australia had its best week for two years last week – despite the Toyota decision and the weak jobs report for January.
Investors ignored that as they realised corporate profits were stronger than expected, and dividends were rising from quite a few big companies (CBA, Telstra, CSL and Rio Tinto for example).
In fact, world stockmarkets climbed for an eighth straight session on Friday after data showing better than expected 4th quarter GDP figures from the eurozone growth and despite evidence that America’s economy produced less than expected in January and December because of the very, very cold winter.
So the euro rose to its highest level in almost three weeks, while gold climbed above $US1,300 an ounce and remained there on Friday.
The Aussie dollar regained the losses on Thursday to close at 90.34 USc – up almost a cent on the day as the dollar fell and commodity prices edged higher (oil regained the $US100 a barrel level and stayed there).
Bond yields rose in most markets with the key US 10 year yield ending at 2.74%.
Markets ignored late news that the Brazilian economy is now in recession with the central bank reporting a fall in GDP in the 4th quarter of 0.2%, the same as in the three months to September, thus meeting the shorthand definition of recession being two consecutive quarters of negative GDP growth.
The solid gains on Wall Street on Friday night mean our market will start solidly in the black this morning, with the futures trading showing a gain of more than 44 points on some contracts..
In the US shares ended the week with the best gains this year, with the tech-heavy Nasdaq Composite hitting the highest level since July 2000.
Investors shrugged off the surprise drop in industrial production data, and the latest storm on the East Coast and pushed the S&P 500 index 0.5% higher at 1,838.63 and up 2.3% over the week.
The Dow closed 126.80 points, or 0.8% higher at 16,154.39 and for a weekly gain of 2.3%.
And the Nasdaq Composite rose for the seventh consecutive session ending with a small gain of 0.1%, to 4,244.03. The index gained 2.9% over the week.
In Australia, the ASX200 had its best week since December 2011, surging 189.8 points, or 3.7%, to 5356.3. The All Ordinaries rose 182.4 points, or 3.5%, to 5366.9.
On Friday, the ASX200 added 48.2 points, or 0.9% and the All Ords had a similar sized gain.
Last week’s gains and especially those on Friday saw the ASX200 emerge from being in the red to up 0.1% for the year so far.
Australia’s big week was driven by the banks, and some leading industrials and miners.
Boral rose 10.5% after confirming a solid first half year result.
Telstra shares rose 3.8% to $5.20 after the small increase in interim dividend and Rio shares added 2.9% to $67.90 after a higher final dividend and better than forecast underlying earnings.
CBA shares rose 3.4%, to $75.99, for the week after the surprise result and higher dividend.
ANZ shares jumped 6.4% after its surprisingly strong first quarter update.
And shares in Newcrest Mining finished the week 6.6% higher at $11.05, after the gold miner on Friday reported a better than expected statutory profit of $40 million for the December half year.
European stock markets rose Friday after economic-growth data for the eurozone confirmed the region is gradually recovering, with almost all member states now out of recession.
The Stoxx Europe 600 index gained 0.6% to close at 333.32, pushing the weekly gain to a solid 2.5%.
The latest round of growth data showed GDP across the zone rose 0.3% quarter on quarter in the final three months of 2013, after a rise in the September quarter.
GDP data for Germany and France showed growth of 0.4% and 0.3% respectively, while Italy, which lost another government on Friday, saw growth of 0.1%, ending the country’s two year recession and the first growth for three years.
Germany’s DAX 30 index rose 0.7% to 9,662.40 at the close on Friday, ending the week 3.9% higher. France’s CAC 40 index added 0.6% to 4,340.14 and gained 2.7% for the week.
London’s FTSE 100 index rose 0.1% on Friday to end at 6,663.62. For the week the index added 1.4%
In Italy the FTSE MIB index jumped 1.6% to 20,436.47 for a 3.8% weekly gain, after Prime Minister Enrico Letta submitted his resignation, following a power play from Matteo Renzi, the head of Italy’s largest party, for a new government to take power.
And on Friday, Moody’s raised its outlook for Italy’s government bond rating to stable from negative, citing a projected levelling off of the government debt-to-GDP ratio and the reduced chance that Italian banks will need government assistance.
The agency said it would consider upgrading the rating if the economy strengthens on implementation of economic and labor market reforms. A downgrade could happen if the economy sags, or if the banking sector needs significant recapitalization from the government.
Friday’s resignation of Prime Minister Enrico Letta and the expectation that Mr Renzi will head a new government didn’t affect the agency’s projections.
In Asia the MSCI Asia Pacific rose 1.6% for the week, the first weekly rise this year and the best five day gain since last November.
The index including Japan rose 0.7% for the week – a sign of the continuing negative influence from the weak Japanese market.
In fact the Tokyo market lost 1% (for the Nikkei) last week, thanks to a 1.5% drop in Friday trading in a holiday shortened week.
The Shanghai market added 0.8% on Friday to 2,115.85 at the close. Shanghai ended the week up 3.5%, the biggest weekly gain since mid-September.
And the Hang Seng Index rose 3.1% last week, which was also its biggest such advance since September.
In commodities, Comex gold futures in New York ended higher at levels not seen since November.
Gold for April delivery rose $US5.60, or 0.4%, to $US1,305.70 an ounce.
March silver saw even better gains, rising 35c, or 1.7%, to $US20.75 an ounce.
March high-grade copper futures was also flat at $US3.25 a pound.
March crude oil in New York lost 5c, or 0.1%, to end at $US100.30 a barrel on Nymex.
It was up 0.4% from last Friday’s close, a fifth weekly gain in a row.
In London, Brent crude oil for April delivery closed up 56c, or 0.5%, at $US109.08 a barrel on the ICE Futures exchange. The contract was up 0.2% for the week.
In the US, March natural gas rose 9.2% for the week to end at $US5.214 per million British thermal units on the New York Mercantile Exchange, thanks to the big winter storms and very cold weather over the East Coast and parts of the South and Midwest of the country.
Gold prices are now up 9.7% for the year so far after the 28% plunge in 2013.
Silver prices are up 11% so far this year after losing 36% in 2013.
