The beginning of the last week did not bring any substantial changes on the US stock markets. The Dow Jones Industrial Average and the S&P 500 were still fluctuating around important resistance levels. Contrary to the NYSE on the FX market we could observe some more determination - the Eurodollar rate set new year-to-date highs, reaching 1.5140.
We can clearly see that markets do not have the strength for a solid growth, but taking into account low level of interest rates in the United States, we can expect that carry traders will continue their investments in the long term, supporting stocks as well as the rise in the Eurodollar. The shape of the yield curve of US treasuries shows that investors do not expect an increase of the cost of capital in the Unites States until August-September 2010.
On the Warsaw Stock Exchange large and liquid companies form the WIG20 are still in the spotlight, while small- and medium-sized companies are moving in a lateral trend or slightly declining. This was clearly seen on Monday, November 23, as companies like PKO BP (+4.05%), Pekao SA (+3.4%), KGHM (+3%) or PKN Orlen (+3.2%) lead the rally. In the following days however WSE became bearish, giving away previous gains.
In the second part of the week financial markets were affected by the news that Dubai refused to pay off his debt. This caused an increase of risk aversion, decline of the Eurodollar to 1.4830 and a sell-off on the stock exchanges.
Moody's has slashed all of it's ratings for Dubai, while investors stayed worried, which financial intuitions can be engaged in Dubai's investments. That is why banks and companies with Arabic shares suffered the most.
This situation has also influenced our domestic market where eg Pekao SA and BRE lost: 3.6% and 2.6% respectively.
