Friday's rise here was a bit of a 'con job' by punters looking to exploit higher commodity prices, and not worrying that the US markets were closed or the European markets were unsettled.
There was this belief that the poor US jobs figures were 'good news' because the 62,000 jobs lost meant US interest rates were not rising any time soon. Jobs losses in the US are going to worsen in coming months.
US investors and some local optimists still don't understand that 2008 earnings in the US, Europe and here are going to worsen, before they get better and that forecasts for a big rebound in 2009 are off the planet. Some forecasts have US earnings rising 20% in 2009.
The AMP's chief strategist, Dr Shane Oliver said in a note on Friday that "It's anyone's guess as to where it will go in the short term. If the oil price continues to surge then shares will remain under pressure, if it falls back then shares will have a great rebound.
"The high and still surging oil price along with slowing growth virtually everywhere, inflation worries and high bond yields are all short term headwinds for shares. Furthermore, the period out to September/October is often rough for shares. "As such, it remains a time for investor caution and this is likely to be the case for the next three or four months.
"Although the next few months are likely to remain rough with further falls possible, we still see shares rallying sharply in the December quarter as the oil price falls back to a level more in line with supply and demand fundamentals, the economic outlook starts to improve and investors start to take advantage of attractive share valuations. The last quarter of the year is normally strong.
In London the FTSE 100 index closed on Friday at its lowest level since November 2005 as it threatened to join indices in Asia, the US and Europe among the bears.
The UK index has fallen 19.6% from its peak in October, leaving it just short of the 20% fall from a recent high that defines a bear market. (It dipped into the bear's den briefly, before a small recovery.)
Friday's 1.2% fall in London though capped a miserable week for shares around the globe: earnings are under pressure, especially in retailing; the credit crunch hasn't gone away and continues to devour housing; oil is the big imponderable and that is making inflation more dangerous than it has been for 20-30 years.
According to figures in the weekend media in London the retail investors have deserted European markets in recent months, with $A65 billion of shares sold in the first five months of this year (that was after $A70 billion was sold off in the last five months of 2007).
The Dow joined the FTSE Eurofirst 300, Japan's Nikkei 225 and the MSCI Emerging Markets index in bear territory.
National indices fell in all 18 western European markets. Germany's Dax Index fell 2.3% and France's CAC 40 3%. The FTSE 100 lost 2.1% over the week.
The MSCI Asia Pacific Index was down for a loss overall for a fourth successive week that has seen the index shed more than 12% in that time. Futures on the Standard & Poor's 500 Index fell 0.7% in European trading.
The MSCI World Index had its fifth weekly drop. Bloomberg reckons that more than $US11 trillion has been cut from the value of global sharemarkets so far in 2008.
Credit crunch related losses from subprime failures and dodgy securities, write-downs, bonds, corporate deals and other high leverage products are estimated to have topped $US400 billion so far, but the surging oil price, high food costs, slowing economies and accelerating inflation have combined to cut market values in every corner of the world.
Asian shares fell for the fourth week in a row with Japan's Nikkei 225 Stock Average posting its longest losing streak in 54 years. (And co-incidentally, General Motors' share price hit a 54 year low last week as well!)
The MSCI Asia Pacific Index fell 3.1% last week and Tokyo's Nikkei fell 2.3% last week, the 12 straight days of losses is the longest losing streak since 1954. The MSCI Asia Pacific Index is down 16% so far this year.
