{tab=Regional & Global}
| MSCI Regional & Global Indices | 1 Week | 3 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | |
| All Country World | 1.59% | 1.47% | 0.12% | -10.86% | -11.01% | 0.15% | 7.48% | 2.08% | 5.40% |
| North America | 0.18% | 0.09% | 0.08% | -9.83% | -9.82% | -0.01% | 10.60% | 9.84% | 0.76% |
| Emerging Latin America | 4.55% | 5.04% | -0.49% | -10.31% | -7.39% | -2.91% | -0.02% | -5.61% | 5.60% |
| Arabian Markets & Africa | 5.18% | - | - | -6.18% | - | - | 9.74% | - | - |
| All Country Asia Pacific | 3.27% | 2.75% | 0.52% | -6.96% | -9.00% | 2.04% | 6.92% | -1.84% | 8.76% |
| All Country Europe | 2.27% | 2.39% | -0.11% | -15.82% | -15.43% | -0.39% | 3.44% | -6.64% | 10.08% |
| Europe, Australasia & Far East (EAFE) | 2.88% | 2.68% | 0.20% | -10.98% | -12.04% | 1.06% | 8.55% | -2.45% | 11.00% |
| Emerging Markets (EM) | 4.71% | 4.36% | 0.36% | -10.94% | -9.64% | -1.30% | 5.13% | -0.03% | 5.16% |
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 Gainers |
 Losers | Data Provided by MSCI Inc. |
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| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI All Country World Index, past five business days, priced in USD |
Macro Notes
Last week global equities managed to stay in the green. The only question is:How long will it all last? Despite the disappointment stemming from a lack so far of more quantitative easing (QE3) from the Federal Reserve, equities continued to rally slightly.
But that changed on Friday morning, when unfavorable payroll numbers were released in the U.S. Equities began to sell off as investors feared that a global economic recession was pending.
S&P's downgrade of U.S. debt continued to have zero effect on Treasury prices, which rose further last Friday, forcing 10-year yields below 2 percent. Bloomberg News reported that minutes from the Fed's meeting on Aug. 9 showed that some members “urged action to stimulate a sluggish economy,” even as the central bank decided for now to take no new action.
There's no question that the markets are eagerly awaiting an announcement of economic stimulus.
{tab=Europe}| MSCI Country Indices | Local Currency | 1 Week | 3 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | ||
| Austria | EUR | 2.29% | 3.38% | -1.09% | -21.00% | -19.72% | -1.29% | 3.48% | -6.58% | 10.05% |
| Belgium | EUR | 1.80% | 2.88% | -1.08% | -14.40% | -13.01% | -1.40% | 1.75% | -8.13% | 9.89% |
| Czech Republic | EUR | -0.71% | 1.63% | -2.34% | -12.03% | -11.08% | -0.95% | 6.90% | -4.85% | 11.75% |
| Denmark | DKK | 3.45% | 4.53% | -1.08% | -23.71% | -22.53% | -1.18% | -2.62% | -12.02% | 9.41% |
| Finland | EUR | 3.62% | 4.72% | -1.10% | -22.49% | -21.23% | -1.26% | -6.51% | -15.60% | 9.08% |
| France | EUR | 1.19% | 2.27% | -1.08% | -19.17% | -17.85% | -1.32% | 2.76% | -7.23% | 9.98% |
| Germany | EUR | -0.57% | 0.49% | -1.06% | -22.51% | -21.25% | -1.26% | 2.91% | -7.09% | 10.00% |
| Greece | EUR | 0.72% | 1.79% | -1.07% | -34.68% | -33.62% | -1.06% | -46.77% | -51.94% | 5.17% |
| Hungary | HUF | -0.59% | 1.52% | -2.12% | -28.20% | -24.37% | -3.83% | -8.33% | -19.95% | 11.62% |
| Ireland | EUR | 3.05% | 4.15% | -1.10% | -15.31% | -13.93% | -1.38% | 3.70% | -6.38% | 10.08% |
| Italy | EUR | 0.97% | 2.04% | -1.07% | -26.32% | -25.12% | -1.20% | -11.95% | -20.51% | 8.56% |
| Netherlands | EUR | 2.28% | 3.36% | -1.08% | -18.09% | -16.76% | -1.33% | -1.17% | -10.77% | 9.61% |
| Norway | NOK | 3.03% | 2.61% | 0.42% | -15.36% | -15.18% | -0.18% | 16.34% | 2.01% | 14.33% |
| Poland | PLN | 0.54% | 1.99% | -1.45% | -23.43% | -17.78% | -5.65% | 3.29% | -1.58% | 4.87% |
| Portugal | EUR | 4.52% | 5.63% | -1.11% | -15.56% | -14.19% | -1.38% | 0.90% | -8.90% | 9.80% |
| Russia | RUB | 2.77% | 3.32% | -0.55% | -14.13% | -10.93% | -3.20% | 12.25% | 7.44% | 4.81% |
| Spain | EUR | 2.11% | 3.20% | -1.09% | -18.11% | -16.78% | -1.34% | -8.16% | -17.08% | 8.92% |
| Sweden | SEK | 2.64% | 3.34% | -0.69% | -22.25% | -20.06% | -2.18% | 6.69% | -5.93% | 12.62% |
| Switzerland | CHF | 4.52% | 0.91% | 3.60% | -11.93% | -18.27% | 6.34% | 12.70% | -12.88% | 25.58% |
| Turkey | TRY | 2.98% | 2.90% | 0.08% | -20.91% | -12.52% | -8.39% | -20.55% | -7.71% | -12.84% |
| United Kingdom | GBP | 3.20% | 3.33% | -0.13% | -9.96% | -9.24% | -0.72% | 7.63% | 2.30% | 5.34% |
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|
Gainers |
Losers | Data Provided by MSCI Inc. |
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| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI Switzerland Index, past five business days, priced in USD/CHF |
Macro Notes
Europe is still reeking of uncertainty. Last week's European equity performance seemed to be stable until Friday, when European equities took a hit. The sharp drop came in after the monthly U.S. payrolls, which showed no jobs were created in August-a far worse indication than economists' expectations of 68,000. European equities dropped as investors bet that a global economic recession was well on its way.
Worse yet, U.S. investors in Europe received a double blow, as Friday's equity performance was tipped off by poor performance in the euro. As shown above, the euro's depreciation relative to the dollar led to negative currency impact across the board. Despite the bad news on Friday, European equities still finished last week in the green. That said, the markets continue to fear the potential effects of a global recession.
Keep a look out for more news in the Swiss equities market, as Bloomberg News reports that Swiss stocks have overcome record franc gains.
{tab=Asia Pacific}| MSCI Country Indices | Local Currency | 1 Week | 3 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | ||
| Australia | AUD | 2.74% | 1.44% | 1.30% | -6.83% | -7.02% | 0.19% | 14.29% | -2.38% | 16.67% |
| China | CNY | 4.40% | 4.26% | 0.14% | -13.87% | -13.80% | -0.07% | -4.36% | -4.17% | -0.19% |
| Hong Kong | HKD | 3.20% | 3.06% | 0.14% | -9.59% | -9.52% | -0.07% | 8.76% | 8.98% | -0.22% |
| India | INR | 7.25% | 6.38% | 0.87% | -11.68% | -9.78% | -1.89% | -9.94% | -11.76% | 1.81% |
| Indonesia | IDR | 0.00% | 0.00% | 0.00% | 0.46% | 0.40% | 0.06% | 25.42% | 18.75% | 6.67% |
| Japan | JPY | 1.94% | 1.83% | 0.11% | -1.86% | -6.86% | 5.01% | 5.78% | -3.68% | 9.47% |
| Korea | KRW | 6.86% | 5.00% | 1.86% | -10.60% | -12.08% | 1.48% | 17.72% | 5.99% | 11.73% |
| Malasya | MYR | 3.07% | 2.30% | 0.77% | -3.82% | -5.55% | 1.73% | 12.88% | 7.07% | 5.81% |
| New Zealand | NZD | 1.67% | -0.29% | 1.96% | -1.13% | -5.30% | 4.17% | 30.18% | 9.72% | 20.47% |
| Philippines | PHP | 3.09% | 2.40% | 0.69% | 3.21% | 0.54% | 2.67% | 17.89% | 10.53% | 7.36% |
| Singapore | SGD | 3.50% | 3.41% | 0.08% | -7.85% | -10.05% | 2.20% | 7.00% | -4.17% | 11.18% |
| Taiwan | TWD | 4.66% | 4.53% | 0.13% | -12.29% | -11.34% | -0.95% | 12.37% | 1.90% | 10.48% |
| Thailand | THB | 3.15% | 2.98% | 0.17% | 1.03% | -0.19% | 1.22% | 21.85% | 17.00% | 4.85% |
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|
Gainers |
Losers | Data Provided by MSCI Inc. |
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| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI China and MSCI Korea indexes, past five business days, priced in USD |
Macro Notes
Friday's market weakness wasn't enough to erase gains in Asian markets. The Asian markets were closed last week prior to the release U.S. nonfarm payrolls and weak economic data, which halted a six-day winning streak in U.S. equities. Optimism fueled a week's worth of gains that proved to be the region's best since January. Buyers returned to markets that had seen consistent weakness over the past quarter.
China's PMI halted its own losing streak, showing nominal expansion for the first time in four months. But inflationary pressures continue to build within the economy, as input costs rose at a faster pace than in July, with raw materials and fuel price increases the main drivers.
The inflation theme is not unique to China, as CPI in South Korea, the spark plug to China's engine, hit 5.33 percent on the back of rising food prices. Concern rages over the impact rising prices will have on the budding consumer class in emerging Asia, especially with a backdrop that includes decreasing Chinese export orders and slowing global factory activity.
Of course concerns over economic growth may trump worries about inflation. Looking ahead, the strength of Asian currencies may soon slow or reverse should local recession fears spread.
One need only look at Brazil's shock interest rate cut to see how emerging Asian central banks may react to perceived economic weakness. A round of unanticipated rate cuts could erode U.S. dollar-denominated investment returns in a hurry. It certainly bears watching, as even the BRICs are starting to feel the pain.
| MSCI Country Indices | Local Currency | 1 Week | 3 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | ||
| Brazil | BRL | 4.65% | 5.99% | -1.35% | -12.61% | -9.74% | -2.86% | -3.81% | -9.55% | 5.75% |
| Chile | CLP | 4.54% | 2.99% | 1.54% | -11.58% | -12.93% | 1.34% | 0.04% | -7.43% | 7.47% |
| Colombia | COP | 3.38% | 2.77% | 0.61% | -5.46% | -5.48% | 0.02% | 2.36% | 0.74% | 1.62% |
| Peru | PEN | 2.79% | 2.78% | 0.00% | -0.25% | -0.29% | 0.04% | 5.36% | 5.27% | 0.09% |
| Mexico | MXN | 4.84% | 3.55% | 1.29% | -4.88% | 1.01% | -5.89% | 15.60% | 9.71% | 5.89% |
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|
Gainers |
Losers | Data Provided by MSCI Inc. |
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| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI Brazil and MSCI Peru indexes, past five business days, priced in USD |
Macro Notes
Latin America showed strong performance last week, as equity prices were in the green across the board for all countries in our Latin America tab. Currency fluctuations played a role in both Chile and Mexico, bringing positive returns to U.S. investors.
On a side note, the Peruvian central bank should be praised for its efforts in managing the country's currency. The Peruvian nuevo sol has remained nearly unchanged for some time. This leaves U.S. investors experiencing returns identical to those of local Peruvian investors; however, U.S. investors should find the lack of volatility in the nuevo sol to be a positive.
In other news, Brazil continued to support its fight against inflation despite its central bank's decision to cut interest rates. Bloomberg News reports that Brazilian Finance Minister Mantega stated that “Brazil has some of the highest reserve requirements and interest rate in the world … if anyone expresses doubts about the seriousness of our monetary policy they must be joking.”
The move to lower interest rates may prove detrimental to U.S. investors in Brazil, as this could lead to depreciation in the country's currency, the real.
Peru reported somewhat gloomy news this week as its trade and tourism ministry is looking at different methods to ensure that the country's exports continue to grow and reach $40 billion this year to offset an expected global economic crisis.
The move isn't a surprise, as the Peruvian Times reports that governments within Latin America are looking to increase intra-regional trade with each other to offset lower demand from the U.S. and Europe.
| MSCI Country Indices | Local Currency | 1 Week | 3 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | ||
| Egypt | EGP | -0.53% | -0.63% | 0.10% | -13.06% | -12.92% | -0.15% | -27.34% | -24.39% | -2.95% |
| Israel | ILS | 5.44% | 5.08% | 0.37% | -17.23% | -11.89% | -5.34% | -10.09% | -14.32% | 4.24% |
| Morocco | MAD | 2.85% | 3.78% | -0.93% | -3.67% | -2.37% | -1.30% | 17.52% | 8.20% | 9.32% |
| South Africa | ZAR | 6.26% | 4.65% | 1.61% | -5.37% | -0.75% | -4.62% | 15.62% | 13.12% | 2.50% |
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|
Gainers |
Losers | Data Provided by MSCI Inc. |
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| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI South Africa IMI Index, past five days, priced in USD |
Macro Notes
The MSCI South Africa IMI Index showed relatively strong returns last week, aided by a strengthening rand.
MTN Group Ltd is the largest component in the index. It's also the largest holding in the index's investable cousin, the iShares MSCI South Africa Index ETF (NYSEArca:EZA - News). MTN Group is a telecom giant with operations across the continent. Its returns largely mirrored those of EZA last week. Also, losses on Friday didn't quite wipe out gains from earlier in the week.
EZA is reasonably diversified across economic sectors. The communications, basic materials and financials sectors each represent about 22 percent of the fund, according to Bloomberg. This mix sounds like it might produce high dividends, but the fund's annual dividend yield is just shy of 3 percent. However, MTN Group says it plans to significantly boost its payout.
Investors looking for a pure rand play without local equities can find it in the WisdomTree Dreyfus South African Rand Fund (NYSEArca:SZR - News). The fund gets its currency exposure using forward contracts or swaps rather than holding currency or investing in local short-term paper. This arrangement is not uncommon among currency ETFs. The contracts are collateralized by U.S. Treasurys.
| MSCI Country Indices | Local Currency | 1 Week | 6 Months | 12 Months | ||||||
| USD | Local | FX Impact | USD | Local | FX Impact | USD | Local | FX Impact | ||
| United States | USD | -0.20% | -0.20% | 0.00% | -11.07% | -11.07% | 0.00% | 10.43% | 10.43% | 0.00% |
| Canada | CAD | 3.24% | 2.35% | 0.89% | -6.70% | -6.59% | -0.11% | 13.77% | 6.01% | 7.76% |
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|
Gainers |
Losers | Data Provided by MSCI Inc. |
Â
| Editor's Choice Graph | Graph Description |
 | Returns of the MSCI United States and MSCI Canada indexes, past five days, priced in USD |
Macro Notes
We enter the week facing much of the same concerns about stalled growth that have plagued the markets for weeks.
Through Thursday, last week looked like it would be a good week for North American equities. Earlier in the week we saw favorable estimates for new jobs from the payroll services company ADP. Indeed, there appeared to be glimmers of hope for continued job growth.
But the nonfarm payroll report changed everything. According to the U.S. Department of Labor, the economy added zero jobs, while economists expected to see an addition of 68,000 jobs. While the private sector saw some hiring increase, it was nowhere near what was expected.
The result:an entire week's gains were wiped out in Friday's trading.
Canadian equities didn't fare much better, although the continued weakness in the greenback helped cushion Friday's pain for unheeded investors.
Expect much of the same this week, as any indication about the state of the economy will continue to drive major market movements. With the last week of August behind us, the markets should become a bit busier, particularly as President Obama lays out new economic plans to address joblessness in the U.S.
{/tabs}