Global Economy - Weekly Review - November 17, 2012 - Eastern Financiers

- The S&P 500 retreated for a second straight week and has lost almost 5% since the Nov. 6 election which set up the budget showdown between Obama and the Republican-controlled House. The Dow Jones Industrial Average slid for a fourth straight week, it's longest slump since August 2011. U.S. stocks however, rose on the last day of the week trimming the weekly slump, as House Speaker John Boehner said budget talks with President Barack Obama were constructive and he would accept an increase in government revenue if coupled with spending cuts. Stocks erased earlier losses as Boehner's remarks spurred optimism that lawmakers would reach an agreement to avoid a $607 billion deficit-cutting package known as the fiscal cliff.

- Asian stocks outside Japan declined this week as companies warned of slower earnings growth. Japanese shares rose ahead of next month's elections. The Shanghai Composite slid 2.63 percent this week. The Communist Party appointed Xi Jinping general secretary, putting him in line to become president, while Vice Premier Li Keqiang is forecast to replace Premier Wen Jiabao. Taiwan's Taiex Index slipped 2.24 percent.

- Japan's Nikkei 225 Stock Average advanced 3.04 percent. Prime Minister Yoshihiko Noda dissolved parliament on the last day of the week triggering an election on Dec. 16 that polls suggest his Democratic Party of Japan will lose. Shinzo Abe, the leader of the main opposition Liberal Democratic Party, called on Nov. 16 for the central bank to pursue unlimited monetary stimulus to end deflation and revive an economy that shrank last quarter at the fastest pace since the 2011 earthquake.

- European stocks posted their biggest weekly drop since June amid concern President Barack Obama and Congress will fail to agree on a new budget, triggering $607 billion of automatic tax increases and spending cuts. Stocks have tumbled around the world on concern that the so-called fiscal cliff will push the world's largest economy into a recession at the beginning of next year. European stocks extended their selloff this week as Israel bombed the Gaza Strip. Hamas's armed wing, the Al-Qassam Brigades, said that it fired rockets at Jerusalem and Tel Aviv. National benchmark indexes fell in every western- European market except Greece and Iceland. France's CAC lost 2.4%, U.K.'s FTSE slid 2.84% & Germany's DAX declined 2.97%.

- A report from the EU's statistics office on Nov. 15 showed the euro area slipped back into a recession in the third quarter as government imposed tougher austerity measures to narrow their fiscal deficits. Gross domestic product slipped 0.1 percent, its second consecutive quarter of contraction. Separate releases showed that industrial production in the currency zone dropped the most since 2009 in September, Greece's economy contracted for a 17th straight quarter and jobless claims rose at the fastest pace in more than a year in the U.K.

Source : Equity Bulls

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