From Gareth Stokes, MoneyWeek editor,

Dear Money Morning Reader,

Are there dark clouds on the investment horizon? Shares in international airlines stuttered last week as volcanic ash swept over continental Europe, halting flights in dozens of countries, and stranding tourists at airport terminals around the globe. Analysts say the Icelandic volcano will dent British Airways’ revenue by some £20m per day. The financial fallout from the eruption could run into hundreds of millions of pounds. And that’s before you count losses to profit and productivity as a result of this intercontinental traffic jam.

It seems almost refreshing markets are recoiling thanks to natural disaster rather than questionable financial instruments. Industrials companies – only months into the economic recovery – will be severely impacted as the flow of inputs and production dries up. Shares in British Airways (-3%) and Easy Jet (-3.3%), TUI Travel (-3.1%) and Thomas Cook (-3%) illustrate the huge impact on UK-based tourism businesses. TUI told Reuters it had approximately 100 000 customers waiting to return from Europe, and that 90% of outbound holidaymakers had rebooked their trips due to flight cancellations. Adding to the uncertainty, crucial talks between the EU and IMF on Greece’s future had to be delayed a week while the dust settles.

US investors – unhappy to be out of the international equity spotlight – rivalled the European fallout with some home grown news. They scurried for ‘safe’ currencies and government bonds following the US Securities and Exchange Commission decision to charge Goldman Sachs with fraud. The regulator is not happy with the way in which the investment bank handled its sub-prime mortgages. Robert Ryan, a currency strategist at BNP Paribas in Singapore, sums the latest investor sentiment: “What is there to reassure markets and provide that good news to turn around the negative risk environment? It’s not clear that there’s anything positive coming.” The flight to temporary safety had an immediate impact on the rand, with the currency slipping from the mid-7.30s to the US dollar back to R7.49/$.

And the JSE All Share followed its Western and Asian peers, shedding 450 points by 2pm on Monday, 19 April. No sector emerged unscathed – though the basket of 15 financial shares was hardest hit. “The market has had a good run-up and was looking a bit overbought, so it will react on any negative news. We will simply continue to watch world markets, particularly the Dow for direction today,” observed one local trader. You’re probably not alone in wondering whether this is the market correction analysts have been talking about. Recent statistics give little reason for hope – confirming your worst fears – the world economy is engaged in an extremely slow and drawn out recovery.

Should you still back your favourite local mining shares? Analysts seem cautious – intent on bargain hunting when prices dip. The real concern is whether local mining executive have their eye on the ball. There are too many non-operational battles playing out domestically – not to mention continued political grandstanding. Who can blame international investors for favouring greener pastures? As enthusiasm for the domestic economy pales you are encouraged to make full use of your offshore investment allowance. Last week we touched on opportunities in Asia, and this week we investigate the best investment opportunities in Europe. At least wire transfers don’t have to contend with volcanic ash! Sign up nowto discover what some of the regions top market commentators are investing in right now.

Turning to the markets...

The JSE all share index advanced 0.38% on Friday. The gold mining index gained 1.56%. Resources traded flat, up 0.01%. Banks and financials weakened 0.84% and 0.29% respectively. Industrials bounced 1.08% and the platinum mining index jumped 0.24%.

London's FTSE100 climbed 0.6%. The Dow Jones traded flat, up 0.07% and the Nasdaq closed up 0.17%.

Tokyo's Nikkei closed down 1.27%. Hong Kong's Hang Seng lost 0.26%.

Brent crude is currently trading at $87.47 per barrel.

Spot gold's trading at $1,158.07 and platinum was last quoted at $1,751.00.

And here's how the rand is performing against the major currencies:
R/$ 7.41
R/₤ 11.43
R/€ 9.89