Weekly market commentary - 19112010

Summary of things happened last week

• US DJ index corrected from the high and rebounded to stay above 11,100 level.
• China Shanghai index plunged about 10% in a week.
• Europe and Asian markets affected, corrected and rebounded.
• Commodities hit 2yrs high and corrected, Crude oil plunged from USD88/barrel to USD81/barrel. Others like energy, metal and agricultures futures fall into correction.

Negative news

• China CPI shot up to 4.4%, causing china government further implementation to control overheating economy like increased the interest rate and raised 50 basis point reserve rate. China is reacting more aggressively to slowing down the economy to avoid bubble burst.
• Europe sovereign debt worry happening on Irish, Greece and Portugal became more serious, impact the confidence.
• Expensive commodities price may bring higher CPI to impact the economy recovery strength.

Positive news

• With effective economy control and rules implementation in China, it may be short term pain, but will definitely benefit the long term economy growth.
• Ease of worry on Europe sovereign dedt worry as good progressive action taken by Irish, as well as the support from EU members/fund.
• Commodities prices corrected to a more acceptable levels align with current economy situation.
• Although the commodities plunged corrected from 5%-10%, it only bring small impact to the global markets - minor/healthy correction.

Recommendation/things may happen in coming weeks

• Market may continue moving sideway to minor correction due to the uncertainties happen globally.
• Japan market looks positive as it may attract the inflow of hot money from the Asian region.
• Current market correction may end before mid December when most of the commodities price look attractive and cheap again, keep an eye on the commodities price. For instance, if crude oil drop towards USD70-75 level, which is benefiting the economy recovery path, the market may rebound and continue the uptrend again.
• Most of the countries are and must do the hard work to grow the economy in order not to fall into double dip recession, more solutions may announce in coming weeks or months.