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Wall Street defies Greeks

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by Peter Switzer

Over in Europe, the Greeks are still spooking share traders with Standard & Poor’s re-rating Greek bonds to near junk status! However, the main story for investors — China — continues to underpin commodities and this helped Wall Street to end nicely positive.

By the way, excuse me for not showing much interest in the budget but I don’t think it will be a market mover. Yesterday I made the point that the size of the budget deficit could be important but the job numbers on Thursday will be more important for interest rates, the level of the dollar and share prices.

US stocks overnight

Back in the Big Apple, the Dow ended up 45.94 points to 12,684.68. The S&P 500 put on six points, or 0.45 per cent, to close at 1346.29. And helping shares was the comeback for precious metals and oil. These plays no longer look like the strategies for the spooked investor but are more in line with what you do if optimism about the global recovery improves. It looks like fear takes the speculators out of the game and renewed confidence brings them back.

US growth forecasts lowered

Interestingly, the once very bullish Goldman Sachs lowered its forecast for the US economy from 3.5 to four per cent down to three to 3.5 per cent. These guys had the economy growing at five per cent in early December last year! Still, three per cent is pretty good.

Meanwhile, Morgan Stanley took its economic growth forecast from 3.6 per cent to 3.3 per cent and they are blaming higher-than-expected gasoline prices for KO’ing the value of the payroll tax cut last year.

Keep an eye on Europe

I know we have some big local stories this week with the jobs numbers being more important for our investments but the big watch needs to be on the debt dramas in Europe. They were ignored on Wall Street today but they do have a capacity to take centre stage, as they did last year.

Mind you, I’m betting they won’t but it’s only a punt as the information we have is so sketchy and the EU officials, who are supposed to monitor their member nations’ debt levels and servicing, can be very erratic.

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: Tuesday, May 10, 2011

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