A week of emphatic actions and reactions

With financial markets reacting violently to every development and speech emanating from Europe and the US, investors have every reason to be bewildered.

This week saw several important events that all had differing effects on stocks and bonds.

Earlier in the week the European Central Bank and Bank of England left interest rates unchanged. By Friday the Euro Stoxx 50 was down 1.3%, led by a 2.8% loss in financials and a 1.9% drop in industrials.

German 10-year yields reached a new record low of 1.81%, while peripheral bonds were trading weaker - with Italian-German 10-year yield spreads widening to 354 basis points.

On Tuesday the Swiss National Bank (SNB) announced that it would intervene forcefully in currency markets to weaken its currency by setting a "minimum" exchange rate of SFr (Swiss Franc) 1.20/à. The bank said it would buy "unlimited quantities" of foreign currency for Swiss francs.

So what happened?

The franc fell from SFr1.11/ à to SFr1.20/ à immediately.

Thursday saw two important speeches by US Federal Reserve chairman Ben Bernanke and US President Barack Obama.

Bernanke spoke about the economy and weak consumer spending without suggesting any solution.

Obama's long-awaited jobs package, revealed in an address to Congress, was met with scepticism, with investors waiting to see if Republicans would back the plan.

Both speeches underwhelmed and US stocks closed sharply lower on Thursday.