Equity Review: Negative sentiment to get worse?

Most stock markets were lower last week, as global growth fears continue to create insecurity among investors. The past week gave an overall dreary picture of global industrial production, as surveys from the US, France, and China were all on the weak side, with Chinese manufacturing  contracting for an 11^th straight month. The only bright spot was Germany, which posted a stronger PMI. Although the US weekly jobless claims were better than expected, it did little to sway the pessimism in the market. There are, however, signs of continued improvement in US housing, which bodes well for the financial sector.

There are more industrial surveys coming out this week in the US, as well Durable Goods orders numbers. We will also get more insight into how consumers in Europe are behaving in Italy, Spain, France and Germany, and how economic uncertainty is impacting consumer behavior.  Continuing discord between Merkel and Hollande on Banking Oversight and a behind-the-scenes Spanish bailout should also scare away some investors and further reduce confidence.

Greece was one of the few bright spots, as it continues to rebound strongly from its low in June, with a 25% upside performance in the past month on strong volume.