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Aussie stocks to rise

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by Peter Switzer

Aussie stocks should go higher today following another nice rise on Wall Street with one of the strong drivers being the best housing construction data since Autumn 2008! Meanwhile top companies such as IBM beat forecasts on earnings, though revenue was softer, as you would expect with Europe and China struggling with growth issues.

Adding to the positive picture for stocks was the Federal Reserve boss, Ben Bernanke, who ruled out a recession in the USA but suggested that if needed he would ‘nuke’ a growth problem with QE3 — my words not his!

More good news came with Bank of America beating forecasts but some experts have panned the result saying that the bar was set too low. But this only means that the negative, doomsday merchants who wrote off the US economy and therefore the performance of key companies as a consequence, were wrong.

I have to say, I hate it when the boomsters falsify reality as stocks head up in a boom, but I have had a gutful of the negative types who have been controlling the media since the GFC started in late 2007. And it’s great seeing so many positive signs accumulating for the US housing sector. A real US recovery needs a more solid housing sector.

Another solid support for stocks today were the comments of China’s leader, Wen Jiabao, who said the Government will “implement a proactive labor policy”, which means growth, jobs and demand for Aussie exports.

Of course, it won’t happen overnight but it will happen and it will happen quicker in China than in Europe. All of this explains why the doomsday merchants are being listened to, but one day that will change and stocks will soar.

For scoreboard lovers, the Dow was up 103.16 points or 0.81 per cent to 12,908.7 while the S&P 500 put on 9.11 points or 0.67 per cent to 1372.78.

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: Thursday, July 19, 2012