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Jobs and Greeks

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by Peter Switzer

Last week the big market-driving news was Greece and jobs in the US. This week, Greece will again be centre stage and it will be local job figures that will catch the attention of interest rate forecasters, exchange rate speculators and stock pickers. Remember, there are some economists who expect another rate cut in December and this week’s job numbers will be a key determinant.

In fact, it’s a big week for local economic data with job ads on Monday, trade data and the NAB Business survey on Tuesday, housing finance and consumer sentiment on Wednesday and jobs along with a RBA Assistant Governor speech on Thursday.

News from Greece

Of course, the fun and games in Greece continue and the current scene in this Greek farce sees Prime Minister George Papandreou dropping his referendum idea after some EU prompting. On Friday, he just won a vote of confidence and is now trying to organise an unity government but the Opposition leader is standing firmly against it. So this is the impasse/uncertainty that markets will have to deal with this week along with a growing concern over Italy and its debt woes.

My new concern is that the troubles in Europe could outweigh the positive coming out of the US and China, to some degree, and this could derail the possible rally into Christmas.

To Wall Street

On Wall Street the Dow ended down 61.23 points, or 0.51 per cent, to 11,983.24. It was down 2.03 per cent for the week and is now up only 3.5 per cent for the year.

The S&P is now at 1253.23 and is down 0.35 per cent for the year.

The year before a presidential election in the US is historically good for stocks and if it wasn’t for Europe there would be little risk that Wall Street would follow the script but the nagging questions over the EU debt-laden members is bound to worry investors for months to come.

Mind you the G20 meeting was a dud with few members putting their hands up to kick into the bailout fund for the EU.

Meanwhile in the US, some 80,000 jobs were created in October, which was about 15,000 short of economists’ expectations but the unemployment rate did fall from 9.1 per cent to nine per cent. Some of this improvement came from some upward revisions for job creation from previous months.

What’s ahead?

It’s a slow economic news week in the US, with consumer sentiment and small business confidence the most important readings released. On the other hand, company reporting continues and has been better than expected, which is a really good omen in a sea of shockers largely outside of the US.

So for us this week, as I suggested earlier, the big drivers for our stocks will be Greece and those job numbers on Thursday.

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: Monday, November 07, 2011

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