So where to for sharemarkets this week after their retreat last week which was triggered by problems at Portugal’s biggest bank?
By the close of trading Friday night, those problems seem to be under control with the family dominated management of the bank sacked by Portugal’s regulators, a situation which took the tension out of markets and saw a modest rebound.
Fears about a possible correction in the US eased on Friday, but are still in the forefront of investor thinking as the second quarter earnings season steps up several gears this week, with a group of major banks, leading manufacturers and several huge tech stocks down to release their figures.
The health and quality of those earnings, plus comments about the outlook could very well re-ignite or dampen fears of a correction – especially with Fed chair Janet Yellen appearing twice in public this week.
As a result, US shares fell 0.9% (the S& 500), Eurozone shares fell 3.7%, Japanese shares lost 1.3%, Chinese shares fell 0.5% and Australian shares lost 0.7%.
The outbreak of share market nervousness saw bonds rally, except in the peripheral Eurozone countries where Portuguese bank problems forced yields higher.
The oil price fell another 2.9% as worries about Iraq abated and Libyan and Saudi supplies rose.
The $A saw a brief bounce higher and it closed just under 94 USc at 93.92.
Grain prices continued to fall because of huge US crops and they are now at four year lows in the US.
In New York, the S&P 500 closed up 2.89 points, or 0.2% at 1,967.57 on Friday, but down 0.9% over the week.
The Dow added 28.74 points, or 0.2% to 16,943.81, but recorded an 0.7% weekly loss, while The Nasdaq Composite added 19.29 points, or 0.4%, to end higher at 4,415.49, but that was 1.6% lower over the week.
That was after European shares rebounded on Friday from Thursday’s losses.
But the Stoxx Europe 600 Index lost 3.2% over the week thanks to the problems with Banco Espirito Santo in Portugal.
And Asian stocks fell, ending the longest streak of weekly gains in more than two years.
The MSCI Asia Pacific Index dropped 1.1% last week, the first weekly fall in the past nine.
In Australia, our market will start with a gain of 10 points or so this morning after the end of share price futures dealings early Saturday morning.
That was after the ASX 200 Index and the All Ordinaries Index lost 0.7% last week to close at 5486.8 points and 5474.6 points respectively.
On Friday, the ASX 200 rose 0.4%, as investors ignored the Portuguese banking crisis and reacted positively to May home loan figures from the Australian Bureau of Statistics, which showed that while lending slowed, new approvals remained solid and steady.
In commodities, an improving supply outlook saw US oil futures drop below $US101 a barrel in New York on Friday to mark a fourth weekly loss and their lowest close in two months.
The reason was the continuing easing of worries about near-term threats to Iraqi oil production, while Libyan production came back online with exports resuming.
West Texas intermediate crude for August delivery fell $US2.10, or 2%, to settle at $US100.83 in New York. US futures prices lost around 3.1% over the week.
The International Energy Agency on Friday said Iraq’s output fell by 260,000 barrels a day in June after violence in the north of the country.
But increased supply from Saudi Arabia, Iran, Nigeria and Angola offset the decline, to leave OPEC production broadly steady at 30 million barrels a day in June.
Comex gold futures settled lower in New York on Friday, but still scored their sixth straight weekly gain as traders liked the better news about the troubled Portuguese bank.
Gold for August delivery fell $1.80, or 0.1%, to settle at $1,337.40 an ounce on the Comex division in New York.
Comex September silver futures ended the week down almost 5c, or 0.2%, to $21.46 an ounce, but that was about 1.5% higher for the week.
Comex copper for September delivery closed nearly flat at $3.27 a pound for a weekly loss of around 0.3%.
And in Chicago, the prices of corn, wheat and soybeans fell to their lowest levels since 2010 thanks to good weather and a lack of concern about the state of the huge US grain crop, especially soybeans.
