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Posted: 08-Aug-2010
Global stock markets are caught between upbeat company earnings reports and economic data that cast doubts on the recovery: modest weekly gains were the result of volatile trade typical of the thin trading volumes associated with summer months, exacerbated by the uncertain environment. The main drivers for market developments have been a) the European sovereign debt woes and the state of its banking sector, b) the threat of a double-dip recession in the US and c) worries over the extent of the slowdown in China. The stress tests of European banks have been less rigorous than warranted, but the markets have given the benefit of the doubt. However, economic statistics cast doubt over the strength of the recovery and with austerity plans due for 2011 no acceleration of the pace of economic activity is likely for the next two or three quarters. We are entering Q3 2010 on a weak tone, with monetary policy tightening in China and car sales in Europe tumbling. The equity market in Qatar rose to a six-week high on earnings but regional trading activity is expected to slow during Ramadan.

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