Market up, so what happened?
by Peter Switzer
Just when we thought we were going to a market hell in a hand basket thanks to the Greeks, along came a big Wall Street comeback. So what in the hell happened?
Just to recap, our stock market lost close to six per cent last week and experts were telling us that the critical indicator for what’s going on in Greece is the ATM action in Athens and Spain. If leadership does not placate people with euros in those countries where a eurozone break up means they go back to old currencies, well we could see a bank run wave that no leader will be able to repel.
The good news
Thankfully good old China came to the rescue of the world economy and global financial markets with Wen Jiabao, the country’s leader, indicating his country will support growth. Don’t you love the irony of history’s greatest communist regime riding to the rescue of modern capitalism?
Anyway, this timely declaration, and the leaders of France and Germany telling the G8 meeting in the USA over the weekend that they will work hard to keep Greece in the eurozone, has helped markets rebound.
There were also important technical levels that held which helped the market turnaround but at this stage it is all about sentiment and overnight it was a win for the good guys, so lets hope it lasts. I suspect we will see some other high anxiety moments over the next four weeks as we count down to the next Greek election on June 17.
Wall Street overnight
For the record the Dow was up 135.1 points or 1.09 per cent to 12,504.48 while the S&P 500 put on 1315.99 points or 1.6 per cent to finish at 1,315.99.
Also the fear index or the VIX slipped from the 25-level of last week down to around 22, which is good to see.
For Facebook watchers the stock was clobbered earlier in Wall Street’s day and was off 13 per cent at one stage. It ended the day down about US$4 from its listing price of $38.
There was no big data revelations in the USA and this will be another must watch for those with market anxiety. By the way, European markets had nice rises as well with the FTSE up 0.7 per cent, the German DAX up 0.95 per cent and the French CAC 40 0.64 per cent higher.
Not a bad effort considering the sell-off last week. We are back in the hands of the EU and for that matter G8 leadership — let’s hope they get it right this time!
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Published on: Tuesday, May 22, 2012
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