Business News

Another good day but can it last?

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by Peter Switzer

No big news but plenty of good news with the German DAX up 0.71 per cent and the French CAC 40 up 0.91 per cent, while the Dow put on 0.65 per cent to end at 13,250.11. All’s good in stock market land for the moment and only Europe in the first half of September can ruin it.

Sure the Yanks — well, the Federal Reserve and its boss, Ben Bernanke — could help or hinder the market’s positivity with a big speech at Jackson Hole at the end of this month and then with the Federal Open Market Committee (FOMC) meeting in mid-September.

See how September is the big month that will make or break this nice rally?

The good and the bad

The good news overnight included:

German Chancellor Angela Merkel throwing off her steely, Germanic ways to infer she will support the European Central Bank’s (ECB) plan to beat the euro crisis.
Cisco reported well and its stock spiked 10 per cent. This company is a bellwether stock.

On the bad news front, this showed up:

Facebook dived again and is now 45 per cent below its listing share price.
The Philly-Fed survey showed factory action in the mid-Atlantic region contracted for the fourth month in a row.

Hopes and promises

As you can see there is no really great news, only some big hopes and promises and economic readings are more weak than strong — that’s why the Europeans have to come through with monetary stimulation and support for Italian and Spanish bonds to drive down borrowing costs.

Stock markets are reacting as though they believe in our European buddies — gee, I hope they’re right or it could get ugly.

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.

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Published on: Friday, August 17, 2012

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