Equity markets ship hefty losses – Global equities moved sharply downwards over the week, as mounting fears about the US fiscal cliff and the deteriorating economic situation within the eurozone dominated the post-US election headlines.
US election outcome – While President Obama was, in the end, re-elected comfortably enough and the Democrats increased their hold on the Senate, the House remains in Republican hands, leading to fears of further gridlock in the coming months on important issues of economic policy.
Improving China – Figures last week in China showed growth in industrial production and an acceleration in retail sales, while inflation slowed unexpectedly, further evidence of an improvement in the overall economy.
Currencies – The safe haven currencies of the US dollar and the Japanese yen both rose strongly over the week, the dollar reaching two-month highs. It was not just a tale of dollar strength, however. The euro was weakened by fresh concerns about Greece and Spain, as well as weaker numbers out of Germany.
Interest rates – Both the European Central Bank and the Bank of England left key interest rates unchanged at their meetings last week, at 0.75% and 0.5% respectively.