FX.co ★ Fundamental Analysis, November 26, 2010

Index declines have been recorded this morning in the Asian stock markets, led by South Korean and commodities stock due to China's attempts to bring inflation under control, the debt crisis in Europe and the tensions in South Korea. As such, the Tokyo stock exchange drops 0.2%, the Hong Kong stock exchange drops about 0.1%, the Seoul stock exchange dives about 1.3%, and the Shanghai exchange retreats by 0.5%.

The European debt crisis is expanding, with Portugal and Spain at the center of concern these days, due to investors' fears that, should the Portuguese crisis worsen, it will expand also to neighboring Spain. Interest rates on Portuguese ten-year bonds have jumped up to 7% yesterday, and those on Spanish bonds leaped up to 5.08%. Furthermore, there exist concerns that the European aid fund is not large enough to also rescue Spain, the 4th largest Eurozone economy. It must be noted that Spain's economy is largest than those of Greece, Ireland, and Portugal combined. That said, the Spanish deputy Minister of Finance stated yesterday that the country would not require funding until the end of the year.

In the same context, the German chancellor, Angela Merkel, clarified in her Berlin speech that despite European concerns over the Irish debt crisis threatening to engulf other Eurozone states, so far no country is required to reorganize its debt. The chancellor added that Germany is ready to act in solidarity with its European partners to preserve the market strength of the Euro.

Today is “Black Friday” in the United States, the opening shot for the holiday shopping season in the United States. As in every year, investors will be watching retail chain sales closely, as they have long become an index of the strength of private consumption, and thus the overall state of the American economy.