Big Berlusconi day ahead
by Peter Switzer
Expect a great day on the stock market today, provided no one in Europe does anything to undo the good news that came from the continent over the weekend. Helping to push Wall Street up was a good consumer sentiment reading but the main game is the EU.
In the US, the Dow finished up 259.89 points, or 2.19 per cent, to 12,153.68 while the S&P 500 ended up 1.95 per cent to 1263.85. Our local market has to take this positive lead and run with it today.
I guess the only remaining concern for anyone contemplating optimism on the markets is that volumes were light on Wall Street. This was totally understandable but we need to see dollars behind these rallies if they are going to be sustained.
The good news
Good news that sent markets higher included the Italian Senate passing the budget law, the expected resignation of Silvio Berlusconi, and the appointment of economist Mario Monti to head an emergency government of naitonal unity. Meanwhile, the Yanks got some positive economic news with the Thomson Reuters/University of Michigan's consumer sentiment number for November the best reading in five months.
I don’t expect the US to take over from Europe as the main driver of markets but some more positive economic data out of the States on top of some good news out of Europe could keep the market heading higher.
However, that’s a lot to expect out of the Europeans based on recent showings.
Locally, there are no big market movers, though the Reserve Bank’s latest minutes from the Cup Day rate cut meeting will be pored over for hints on future cuts. Also, talk today of a possible mini-budget looks like tough talk to persuade the RBA to think about more rate cuts which would be great for the economy and Julia Gillard’s popularity.
Today’s poll reading from Nielsen says she’s up six percentage points and level-pegging in the preferred PM stakes with Tony Abbott. However, her party is still on the nose and would be clobbered if an election was held now.
Lower interest rates, even though the Government doesn’t control them, would help Labor throw off the ‘dead party walking’ tag.
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Published on: Monday, November 14, 2011
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