It’s a Boomtown Rats start to the week on Wall Street and its why I’m starting “to hate Mondays” with the Yanks enduring seven out of seven down Mondays in a row. And in terms of sessions, we have seen six out of seven in negative territory.
The news is bound to test our stock market today but it could well be China’s Shanghai Composite that ultimately determines our fate.
The key Chinese stock market index had a bad day yesterday while other markets went higher and so today our stocks will have to cope with that and a bad retail number in the USA. By the way, our market and the Shanghai Composite have a close correlation nowadays.
For the record, the Dow only lost 49.88 points or 0.39 per cent to 12,727.21 while the S&P 500 index gave up only 3.14 points or 0.23 per cent to 1353.64.
Good and bad news
Running through the good and bad news:
Citigroup reported better than expected earnings but nothing flash — that’s good.
Retail was a shocker, down 0.5 per cent in June when economists were expecting a rise of 0.2 per cent — that’s definitely bad.
The IMF cut its global forecast for 2012 from 3.6 per cent to 3.5 per cent, which is good considering how bad the world economy seems, but they’re not great forecasters!
The New York Federal Reserve's gauge of manufacturing activity in the State of New York or Empire State was up from 2.29 in June to 7.39 in July.
The Wall Street Journal says the European Central Bank could make senior bond holders on some Spanish banks cop a loss but this has not apparently affected the market.
Europe, economy and earnings
This is a ‘big E-week’ with Europe, the US economy and US earnings set to leave a sweet or sour taste in the mouths of those who make or break stock markets.
Also Ben Bernanke speaks tomorrow and all eyes and ears will be on what he says with many traders desperate to hear him utter something positive about QE3.
I suspect China’s stock market will right itself this week because lending data out last week was positive, but we’re in the hands of the gods when it comes to US company earnings and the economy. My bet is that they will disappoint but there has been an OK start to the week despite the market’s small slip today.
The Boomtown Rats’ Bob Geldof became famous for the Live Aid concert but right now investors are desperate for a market aid initiative. Ben Bernanke might be the market rocker that could create a rally but I’d prefer it to come from the leaders of Europe. When they get on song, stocks will soar up the charts!
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.