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Eurozone Remains in Spotlight in Week Ahead

24 October 2011 - News - Editor

Europe's leaders gathered in Brussels over the weekend to discuss the region's crisis, and with a formal announcement expected to be made on Wednesday, investors are very hopeful that a resolution to the escalating problems in Eurozone economies will be found. While pointing out that the circumstances currently facing Europe are unprecedented, Germany's Chancellor, Angela Merkel, noted that progress had been made, referring to working through the region's problems as a "painful process". In the weeks leading up to the summit, French President Nicolas Sarkozy and the German Chancellor appeared to differ of how best to proceed with a government-backed fund to assist banks and Eurozone economies, but Wednesday's announcement is likely to reveal if they have come to an agreement in this regard.

While global economies have been sailing uncharted waters for some time now, Wall Street stocks rallied ahead of the weekend's summit, with investors anticipating some reassuring news in the week ahead. Both the S&P 500 and the Dow Jones industrial index closed at their highest recorded levels since the beginning of August. Analysts have noted that investors appear to have factored in a favorable resolution to Europe's financial woes, but are still very edgy as they head into a new week.

In addition to keeping an eye on Europe, investors can look forward to more third quarter results in the week ahead. Seven high-profile Dow components are due to report, including 3M and Caterpillar, with Amazon, Netflix, Visa and Sprint Nextel being among the 189 S&P 500 companies expect to publish results.

Economic news in the week ahead for US markets include updates on labor and housing markets, including the Case-Shiller 20-city domestic property price index and pending home sales. Durable goods orders, personal income and spending, as well as consumer sentiment will be made available, with the government's first reading on the GDP for the third quarter being released on Thursday.

Trading in London on Monday morning reflected a level of confidence in Europe's leaders being able to rescue beleaguered economies, with the FTSE edging higher. Economists and analysts consider Wednesday's announcement by the European Financial Stability Facility to be fundamental to the direction the FTSE will take for the final quarter of 2011.

 


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