Another good week for equities, but nerves may fray on Greece

The stock markets ended last week on a very positive note after the US non-farm payroll data were better than expected. The US ISM rose a tad in January to 54.3 with the order component contributing. From the EU we had Business Indicators rising and from Germany falling unemployment and a good PMI reading of 51.0. Europe enjoyed another good equity week with Euro Stoxx50 rising 3.2%, outpacing US S&P500, up 2.2%, and MSCI World (USD) with a rise of 2.0%. Denmark did exceptionally well with 6.8% driven by Novo A/S. 

Sector performance was concentrated in Services and Electronics. Finance did well, still riding on the fumes from the European Central Bank’s LTRO (Long-Term Refinancing Operation). The non-solution in Greece could become an issue in the coming week. The closer a default/bankruptcy comes the more nervous the market could become. 

The LTRO has calmed the bank sector somewhat, and a Greek breakdown would be more manageable today than in early December.

We have a great number of earnings reports this week and mining companies are well represented. This will be particularly interesting giventhe “Merger of Equals” involving Glencore and Xstrata. 


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