Did anyone notice that the 10th US bank went bust over the weekend: it was small, just over $US1 billion in assets: the 9th was the week before. That's going to refocus attention on the still weak US financial sector.
Oil and commodities took a pounding Friday and in August.
Japanese inflation surged over 2%, the highest in a decade and the Government revealed a $US105 billion stimulus package Friday night. Indian economic growth sagged, hitting a three and a half year low, with inflation still high.
In Britain, UK house prices sagged by more than 10% in the year to July and the country's Chancellor of the Exchequer (Treasurer), Alistair Darling said the country's economic state was the worst in 60 years.
It was a very gloomy end to a week and a month where many investors started believing that the bottom had been reached and the worst of the volatility was over.
Far from it for the US, Japan, Europe and the UK: in Australia; despite the $5 billion or more in red ink that flowed Friday as the boom losses flooded the market, there was a feeling that perhaps things had overshot.
Our market rose 3.2% in August, and it was all down to the performance last week which turned a losing month into a winner. The market rose around 4.1% last week.
Earnings for June 30 companies outside financial and property. Infrastructure sectors seem to have been solid, but there were some nasty losses among smaller commodity companies and the $A31 billion in earnings from Rio Tinto (interim) and BHP Billiton (final) does distort the figures.
This week's interest rate cut won't help or hinder sentiment: banks, builders and building suppliers have all seen improvements in prices since it became apparent a month ago that rates were coming down.
In the US the poor consumer spending figures for July (despite a rise in consumer sentiment) saw the markets all but reverse Thursday's optimistic bounce.
The Standard & Poor's 500 fell 17.85 points, or 1.4%, to 1,282.83; the Dow lost 171.22, or 1.5%, to 11,543.96 and Nasdaq dropped 2%, or 44.12 to 2,367.52.
The S&P 500 gained 1.2% in August, breaking a two- month retreat; the gain was fueled by a more than 20% drop in oil which boosted car companies, retailers and those companies supplying them. There was also some improvement in a wide spread of US financial stocks.
For the month, though, the Dow added 1.5% and Nasdaq rose 1.8%.
It was only the S&P 500's third monthly advance since reaching a record 11 months ago in October, 2007. It is still down 13%.
The Australian share market closed higher on Friday, driven by gains in the financial sector. The benchmark ASX200 index was up 69.1 points, or 1.4%, to 5,135.6, while the All Ordinaries rose 72.2 points, or 1.4%, to 5,215.5.
But after Wall Street's fall on Friday, the futures market has our market opening down around 29 points. But traders will play it safe with the US closed for the Labor Day holiday.
For August the best stocks in the ASX 200 were Resmed, up 36%, Spotless, up 28.6% (after a 25.6% rise last week in the wake of an average profit). PMP was up 27.8%, CSR, 27.5% as investors factored in positive news from the interest cut for its building products businesses and Billabong rose 27.3% after a solid annual result.
The dogs were dominated by the Babcock and Brown groups: B&B Power lost 88.8%, BNB itself shed 62.3%, B&B Infrastructure, 37.2%, Great Southern, 30% and Gunns shed 29.3%.
Oil fell 6% and the Australian dollar shed more than 8.5% to close around 85.60 US cents in New York early Saturday, compared to more than 93.70 US cents at the start of August.
That has helped taken the pressure of many exporters, but has clipped the fall in oil and petrol prices, reversing the way that the stronger dollar soften the blow of record oil and petrol prices earlier in the year.
European stocks rose for a fourth day on Friday with the Stoxx 600 Index erasing August's losses to finish up 1.6% for the month.
London's FT 100 rose 0.3% on the day and finished with its first monthly gain since April.
German and French indexes were also higher.
The Footsie rose 2.4% last week (despite more gloomy news on housing and economic growth) and it finished up 4.2% for the month, the biggest rise among the world's 20 major indexes.
Asian shares also finished on a solid note.
Australia of course rose on the day, the week and the month, while the MSCI Asia Pacific Index finished up 3% on the week, the first weekly gain since late July.
It's still down 21% over the year so far.
The Nikkei in Tokyo finished higher on the day and the week but was down 0.7% for the month
In Hong Kong the Hang Seng index rose 4.3% over the week, but was still off 6.6% in the month. India's BSE index rose 4.5% over the week. China's markets were down for a 5th successive week last week. although they were higher on Friday.
The AMP's Dr Shane Oliver says that the Australian June half profit reporting season has now effectively wrapped up and while the results over the last week had a somewhat better tone, the broad themes were of basically flat profits overall, a low proportion of companies surprising on the upside and caution regarding the outlook.
For the first time since earlier this decade more companies came in below expectations (29%) than came in above (27%). 44% of results were in line with expectations which is well up on an average of 27% of results in line over the previous four years. See the top chart.
Resources stocks generated the strongest upside surprises whereas the key sectors to disappoint were diversified financials, consumer services and utilities.
More significantly though, there have been more companies with cautious or outright negative outlook comments than with positive comments whereas back in August last year the ratio of positive to negative outlook comments was running at 12 to 1.
The bottom line is that profit growth for 2007-08 was close to flat and analysts' earnings growth expectations for 2008-09 have been revised down further.
Other themes flowing from the reporting season have been a mixed picture for margins, rising interest costs, the negative impact from the strong $A.
