Markets can’t beat the R-word
by Peter Switzer
The only good news to take away from Wall Street’s negative trading overnight was with all of this recession talk around — definitely for Europe and now even for the USA because of Europe — the Dow only lost 131.46 points, or 1.1 per cent, to finish at 11,823.48. Meanwhile, the S&P 500 gave up 13.91, or 1.13 per cent, to end at 1211.82.
Adding to the negativity is fund managers who would be taking profit as the likelihood of a Christmas rally peters out. Our market will find it hard to resist gravity with commodities slammed overnight — recession talk will do that. Oil has slipped from its recent $US100-mark to $94.87 a barrel. Gold also copped it losing $88.55 to $US1574.55!
This is all Europe but there’s a little bit of Asian contagion creeping into the market as well with a Europe recession expected to hit Asian markets, which are big suppliers to the Continent.
Adding to the woes, the Italians had to pay 6.47 per cent for five-year bond borrowings and this reflects disappointment at the wash-up of the EU meeting in Brussels.
Right now some 25 per cent of 250 economists surveyed by Reuters tipped the US would go into recession but that means 75 per cent disagreed.
The experts think growth will be 2.1 per cent for next year and that will only be better if the European Central Bank puts on its Santa Claus hat and spreads some money around Europe in the direction of the bonds that the PIIGS countries are selling.
But that could be a Christmas dream of mine that just won’t come true — the R-word will do that sort of thing. So what is the Christmas gift in all of this economic and market gloom? Buying opportunities!
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.
Published on: Thursday, December 15, 2011
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