NO IMPROVEMENT ON MARKET VOLATILITY EXPECTED THIS WEEK - After two weeks of massive falls on international stock markets, on fears about the condition of leading economies, the president of the World Bank has warned that world markets have entered a 'new danger zone'. Robert Zoellick said investors had lost confidence in the economic leadership of several key countries, and that developing countries are now the source of growth and opportunity.
Oliver Gilvarry, head of research at Dolmen Securities, says the recent extreme volatility on world markets shows that they are in a danger zone. He says that weak growth from the likes of France and the US are also a major cause of concern, with the emerging markets the only bright spot on the global horizon. He says that no real improvement is expected on the markets this week, with a lot of key data due from the US, including industrial production and inflation figures.
Looking ahead to tomorrow's meeting of Germany's Angela Merkel and French president Nicolas Sarkozy, Mr Gilvarry says that markets will want details on the euro bond idea. He also says that greater harmonisation of euro states on fiscal policy is also needed. But he says there is always a concern that the two leaders will announce some plan - without much detail - which will just serve to unnerve the markets even further.
The analyst also says that there is huge flow of funds into safe haven markets including the Swiss franc and the yen. He says that everyone is trying to devalue their currencies, which in turn will bring more volatility to the markets.
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MORNING BRIEFS - Aer Lingus flights to America's west coast could resume as soon as March next year. The airline says it is considering relaunching a service and the outcome of its discussions will be made known 'shortly'. The airline has had talks with four Californian airports - San Francisco, San José, Oakland and Los Angeles - about operating a service there.
*** Fast food chain McDonalds - which has 79 Irish restaurants employing 3,850 staff - says it will create another 70 jobs as it opens a 24 hour drive-through restaurant in Dublin's Liffey Valley retail park. The chain also plans to open another two restaurants this year in Dublin - in Balbriggan and Ballymun.
*** Japan's economy shrank by less than expected in the three months to June, showing stronger signs of recovery after the tsunami in March. The economy contracted by an annualised rate of 1.3% in April, May and June, or 0.3% from the previous quarter. Most forecasters had expected much higher drops of about 2.6% and 0.9%. The figures should boost optimism that Japan will emerge from recession. The economy there has contracted for three quarters in a row. A recession is defined as two consecutive quarters of contraction, or shrinking economic output.
*** On the currency markets this morning the euro is trading at $1.4294 cents and 87.73 pence sterling.
