Business News

Big Berlusconi day ahead

| More

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.

RBA focus

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.

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.

Watch more from Peter on SWITZER TV.

Published on: Monday, November 14, 2011

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.

Why Aussie stocks lag Wall Street

Kill QE, kill rally? Nope!

Dow to reach 20,000 – can you believe it?

It’s not All Too Hard, it’s More Joyous!

Abbott deserves a Tony Award for that speech!