Weak dollar makes markets nervous

CONCERNS over the dollar’s weakness has been undermining stock markets and further weakness is expected in the days ahead. Concerns about the dollar’s weakness as well as trade deficits and capital flows out of the US are making investors edgy.

They have used the bad news on the capital flows to sell some stock and, in a market that is still short of positive earnings projections, the reaction was to be expected, said analysts.

Just to prove the conventional view of what's happening, the Dow Jones opened up 37 points in early trading to reach 9661. The Nasdaq, which has made huge gains in the past 12 months, edged up 9 points also in early trading to reach to 1891 points Stuart Draper, head of research at Dolmen, Butler Briscoe says the pointers for the future are still "quite positive".

And he expects that when the nervousness about the US eases in the months ahead that further stock market gains are in store. Worries about the growing dollar weakness down about 6 cent in the past week could impact on mainland European markets in the coming weeks. European analysts said declines. European analysts said declines.

"A weak dollar will hurt European companies' sales just as they are struggling to boost revenue," said Juan Maria Soler, who manages about $2.3bn at Sabadell Banca Privada in Barcelona, Spain. Neither does it support a US global economic recovery, he warned.

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