Business News
Europe-USA decoupling?
by Peter Switzer
Another nice up day on Wall Street but can it last? Of course, there will be an eventual selloff — there’s far too much anxiety around right now — but will it be more short-lived than last year?
At this stage there isn’t enough to excite reluctant investors back to stocks but the January Effect is a positive omen that should be considered by investors.
CNBC points out that “since 1950, the market has started the year with five consecutive gains on 38 occasions. It ended the year positive 87 per cent of the time!” (The Stock Trader's Almanac)
It would have been a very good sign if the S&P 500 could have made it to 1300 but it finished up 11.38 points, or 0.89 per cent, to 1292.08.
Another good sign is that more and more market experts think there’s a decoupling happening between the US stock market and the European debt story. Six days in a row with Wall Street up adds weight to the argument. And Alcoa’s better-than-expected company report also buoyed traders. This is all great news but Europe is still going to be the make-or-break factor for stocks this year. We’re currently hearing good-to-OK news but if something dramatic like a Greek default happens in March then there would be a big selloff!
However, if the Europeans really impress with their debt policy and fiscal policy decisions and the ECB kicks in more positively, then stocks will boom.
It’s too early for the cautious to become optimistic and this will put a break on the stock market but we’re moving in the right direction. Let’s hope we can sustain it.
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: Wednesday, January 11, 2012
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.
Related articles
Abbott deserves a Tony Award for that speech!
Abbott’s budget reply: is he really trapped?
Budget 2013: what are the real issues?
blog comments powered by DisqusFree Switzer Newsletters
Market Summary
