Market down, but who knows why?
by Peter Switzer
The real reasons are uncertainty over Spain’s rescue but more importantly, the Greek election. For the market it’s a case of Sunday too far away that has meant traders are playing games and today the result is stock prices are down. Tomorrow it could be the reverse.
The Dow ended down 77.42 points or 0.62 per cent to 12,496.38. Meanwhile the S&P 500 index was off 9.3 points or 0.7 per cent to 1314.88.
We are in a traders’ market and it will be that way until there is clarity that overall market conditions will get better or worse. The Greek election is a critical plank in the platform needed to build a base off which a rally can happen or, God forbid, a crash could ensue!
The big scary news of the day was that Greek banks were enduring an 800 million euro of exit from ATMs and old-fashioned withdrawal as the population braces itself for the poll. But this isn’t just speculators trying to avoid a capital loss, this involves normal people stocking up with food in case the place goes into shutdown mode after the election.
Economic news out of the US was OK with producer prices down one per cent due to lower energy costs, which is a good thing for a recovery. Inventories, however, rose, which might mean sales are starting to slow with retail numbers down 0.2 per cent in May, which was expected. There’s certainly no panic shown by the US consumer and that’s a positive sign considering the uncertainty out there.
On the local front, the Westpac consumer confidence reading went up a low 0.3 per cent in June, which was pretty weak considering the rate cuts recently and shows how Europe is spooking everyone. The reading is now 95.6 and any reading under 100 says consumers are pessimistic.
The survey showed 25 per cent of people think property is the wisest place for their money and this is up from 18 per cent last month — that’s a big jump of support for property.
Also the outlook for consumers’ personal finances was the lowest in 22 years, which suggests that great growth and job numbers are not helping us get positive in a hurry.
This again underlines the importance of the Greek election as it could help stocks and confidence, but for now, as I have said — Sunday is too far away!
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Published on: Thursday, June 14, 2012
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