Best of Friday’s web

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European concerns have returned to the market, as fears over the health of the Spanish economy and the future of France after upcoming elections pressured equities today. China's lower-than-expected GDP numbers overnight also weighed on markets.

The Economistreports on renewed fears of a European crisis stemming from Spain

European markets have been particularly volatile over the past few weeks as a result of the re-emergence of concern over the fiscal health of periphery members of the euro zone. In particular, the Economist discusses the fundamental problems with the Spanish economy that will persist barring major reform. Simply, Spain will be unable to borrow at these rates for long, and the Spanish economy will be particularly handicapped if growth shrinks as a result of recently implemented austerity measures. Combined with weak banks , it is likely that Spain will soon have to tap into the European rescue fund to shore up its banks. Evidently, Spain ( EWP , quote ) continues to face manifold problems, and long-term investors should avoid trying to pick a bottom just yet.

Neil Munshi and Girija Shivakumar for the Financial Times discuss the opening of India and Pakistani economic ties

In spite of decades of antipathy and ongoing disputes over Kashmir, India and Pakistan have finally started to take meaningful steps towards broad economic cooperation: Pakistan has granted India Most Favored Nation status; India's Minister of Commerce has announced his country's intentions of opening up to foreign direct investment from Pakistan; further, India ( EPI , quote ) has allowed Pakistani businessmen to procure visas. This is a positive development for both nations, as increased economic co-dependence would drastically reduce the possibility of another armed conflict between these two historic foes. The less likely the chance of a war between India and Pakistan, the more attractive the countries become for foreign investors.

Bloomberg comments on China's lower-than-expected GDP numbers

Overnight, Chinese GDP growth for the first quarter came in at 8.1%, lower than analysts' forecasts of 8.4%. This slowing growth in the Chinese economy ( FXI , quote ) put pressure on global markets today, even though these numbers suggest that China may have avoided a hard landing .

Scheherazade Daneshkhu in the Financial Times reports on the how failed promises could come back to haunt Sarkozy

French President Nicolas Sarzoky looks set to suffer defeat in the second round of French presidential elections in a few weeks' time, as disillusioned French voters are frustrated by Sarkozy's failed efforts to increase employment opportunities, particularly amongst French youth. Investors in France ( EWQ , quote ) should tread carefully, as Sarkozy's primary opponent and likely winner of the second round election, François Hollande has campaigned on a platform that is overtly hostile to business, including a proposed 75% effective tax rate on France's top bracket. A victory for Hollande could see French equities continue to slide.

The Economist discusses employment and growth in Asia

A post in this week's edition of the Economist describes a fall in productivity amongst employees in Asian economies in spite of the fast rate of growth in these countries. According to the British newspaper, "the job yield from growth has dropped across most of emerging Asia." In other words, it will be more difficult for emerging markets in Asia to make incremental gains in productivity going forward.

Disclosure: Author owns EWQ puts ; immediate family is long EPI.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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