The European Union was awarded the Nobel Peace Prize on Friday as the latest in the European Summits approaches on October 18-19. The agenda includes Greece and Spain as Greece is projected to run out of cash in November and Spain has yet to make a formal bailout request.

During the recent IMF annual meeting held in Tokyo over the weekend, global finance chiefs were not as optimistic especially as emerging market growth continues to slow. European equities closed last week mostly in the red as the Spanish IBEX slid -1.06% followed by a -0.78% drop in the Italian MIB.

The French CAC 40 was also weaker, falling -0.72% while the Swiss SMI outperformed against peers, rising 0.02%. Since the open EURUSD has ticked lower with risk-assets, declining -0.36% to 1.2904.

Comments at the IMF about the slowing global economy have influenced markets overnight with developing nations suffering a decline. China reported the CPI and PPI overnight which showed a dramatic fall in producer prices while consumer grew at the slowest pace in two years.

Imports of raw materials climbed 2.40% year-over-year however exports to Europe fell over 10%. This cool down in inflation could mean further room for a rate cut in China, however, with the government trying to put on the brakes on the housing market this is unlikely immediately.

Equity indices are trading mixed right now as the Hang Seng is down -0.12% followed by a modest -0.02% drop in the Australian ASX. The Nikkei is outperforming, rising 0.29% as USDJPY strengthens 0.22% to 78.600.

The market comments from the IMF meeting this last weekend along with a softer global outlook have taken the air out of the most recent rally as emerging economies continue to slide. The U.S. in particular is seen with a 15% probability of reentering recession.

The U.S. dollar has increased markedly against peers in the overnight session as investors seek haven in dollar denominated assets.

The dollar index (DXY) has risen 0.30% to 79.908 in response. Equity indices closed mostly weaker last week as the S&P 500 lost -0.30% trailed by the -0.17% fall in the Nasdaq. The Dow Jones managed to stay in positive territory, adding 0.02%. Commodities have continues to tumble with gold falling -0.85% to $1744.70 and WTI crude oil declining -0.88% to $91.05 per barrel.

Jonathan Miller , Global Market Analyst