Growth concerns back on the agenda

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Riskier assets fell broadly Monday morning, dragging down Asian shares, copper, precious metals and oil. The US dollar strengthened with EURO-USD at 1.2949. The Q3 party seems to come to an end as investors shift their focus to weak economic fundamentals and the euro zone debt bailout scheme. There also seems to be serious disagreements between German chancellor, Angela Merkel, and French President, Francoise Holland, to the implementation of an EU banking union and the EU bail-out fund.

The south East Asian Pacific index, MSCI, fell 0,7 % with the Shanghai composite and the Japanese Nikkei also falling. Renewed fears for a hard landing in China saw both the Australian dollar and resource-reliant Australian shares falling. The dollar index measured against a basket of key currencies, is up 0,3 %. Investors are also increasingly nervous about the unintended consequences of last Q 3 decision of the US Federal Reserve. FED buying of state bonds means more printing of money. Last week the Brazilian Finance Minister directed a blistering attack on the US, accusing FED for starting a currency war.

Markets have over the last days oscillated between euphoria of central bank’s monetary stimulus measures and uncertainties over weak economic fundamentals. Investors are nervous over downside risks and wariness ahead of US corporate earnings reports next month. Euro zone fears are back on the agenda with disagreements on the banking union, whether Spain shall ask for a full bail out and Greece where the “troika” of representative from the International Monetary Fund, the European Central Bank and European Commission have postponed presentation of their last report strengthening rumors about a possible Greek Exit from the Euro.

These developments has led to increased downward pressure on the Euro and weaker oil prices. Both NYMEX and Brent crude is falling. Brent is trading one dollar down to 110,40 pr. Barrel. Copper has fallen 0,9 percent. Gold is weaker at 1761 down from its peak on 1787 on Friday. The optimism over the strong measures taken by central banks in the US and Europe are fading on realization that the monetary measures are not backed by economic fundamentals. Spain has displaced Greece as the center of the euro debt crisis. Markets worry that Spain eventually might need external aid to help solve its debt problems.

These factors combined mean that the markets are off to a rather gloomy start on the week.
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