Stocks tumbled worldwide last week as treasuries bonds rallied when investors sold off their stocks turning away from riskier assets into safe-haven ones like treasury bonds. Although the relationship between Treasury bond prices and the stock market is fairly indirect, the two tend to move in opposite directions. When investors panic or become bearish about their investments in the stock market, they tend to transfer their cash into the bond market, buying much safer instruments in exchange for their riskier stocks.
Many analysts have claimed that the reason of the sell-off was the recent concern about borrowing costs in the US which could slow takeovers and mergers, spur debt defaults, and curb earnings, prompting investors to flow riskier assets such as stocks. Many other also talk about the housing recession, exacerbated by climbing foreclosures among subprime borrowers. But haven’t we heard that story for more than 2 years? Perhaps analysts are just looking for reasons for a more than overdue negative correction. The question that I ask myself at this point is whether this is just a buy signal for cheaper bargain stocks or whether this is a more serious occurrence that can change the current bull market sentiment to a bear one. Stocks have risen to mighty heights prodigiously fast. The Dow Jones index has hit three milestones in nine months - crossing 12,000 in October, 13,000 in April, and just 2 weeks ago, 14,000. Sell-offs in equity markets are frequent, perfectly normal, and even healthy. When stocks increase in such a rapid manner their prices become unsustainably high. Only by falling occasionally (and even sharply) in the short run can stocks continue to rise in the long-term. Without the anguish of today's drop, the frenzy of tomorrow's good returns becomes unattainable.

The Hungarian Forint (HUF) extended looses all last week as emerging currencies continued to suffer from increased global risk aversion. The forint slide started on Wednesday of last week as emerging market assets were hit across the board when investors shun emerging markets such as Hungary on growing concerns, many claim, of a US mortgage fallout.
Other central European currencies suffered from the sell- off, such as the Polish zloty and the Slovak koruna.

Gedeon Richter Nyrt., Eastern Europe's biggest drug maker, published second-quarter results on Tuesday July 31. The results were better than expected. Sales revenue was HUF43.4bn vs the consensus 41.6bn. The higher sales were fueled by export sales (former Russian Republics, US, and EU markets) On the other hand, the domestic sales were hurt by the Hungarian government slashing subsidies and raising duties on drug makers. The analysts of Cashline Securities (Budapest) believe the results reflect signs of a rebound in the operations after the last 12-month market fallback in export markets and the negative effects of the changing local legislation. After the results, Richter received heavy buying pressure as investors are more optimistic of the Hungarian Pharmaceutical stock.

Hungarian oil and gas company MOL on Tuesday announced it had signed an agreement
to purchase 100pc of Italian peer Italiana Energia e Servizi (IES) for a price in line with MOL's target.
Bloomberg news claims that the final purchase price will be disclosed only after the closing of the transaction, expected to take place in Q4 2007, after approval by competition authorities.
MOL said it would transfer its know-how to improve the profitability of the refining and marketing operations.
This acquisition might somewhat disappoint the market from the point of view of pricing, but the might trigger a moderate upside in the share price.
On the other hand, many analysts do not expect a significant fall in the share price until the speculation regarding a buyout offer from Austrian competitor OMV remains and MOL continues purchasing its own treasury shares in order to avoid a hostile takeover.