Will the RBA put the frighteners on us?
by Peter Switzer
Good news continues for bulls on stock markets with a less than impressive jobs report in the US not stopping major indexes finishing in positive territory. In fact, it was a solid week for optimists with Egypt’s problems not getting in the way of the Dow Jones index finishing up 2.27 per cent for the week.
The Nasdaq was up over three per cent and the S&P 500 index put on 2.71 per cent.
For me a good omen is the VIX or fear index going under 16 on Friday, which confirms that share players are not spooked at the moment. It also coincides with a big outflow of funds from bonds into shares.
US jobs report
On the important economics front, the unemployment rate fell from 9.4 per cent to nine per cent in the States but the non-farm jobs created were only 36,000. That should have spooked the stock market but the shocking weather in the US was responsible for 32,000 construction jobs and 45,000 courier jobs being frozen out over the month.
Meanwhile, manufacturing jobs surprised on the high side, which excited those who could understand the labour force data for January.
However, bears will not have missed the fact that some 145,000 jobs were expected!
For local stocks, there could be a bit of resistance today as the greenback rose in value and the oil price fell.
Still to come
Ahead this week are more earnings reports, which will take centre stage over economic data with consumer sentiment likely to be the most important release.
In Australia, it could be a big week for interest rate worriers. Today we get the latest job ads figures and retail sales for December. Wednesday brings consumer sentiment, while Thursday we will see the important unemployment numbers. It’s the tightness of the job market that worries the Reserve Bank, and the Governor, Glenn Stevens, is bound to make headlines on Friday when he gives testimony to the Parliamentary Economics Committee.
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.
The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.
Published on: Monday, February 07, 2011blog comments powered by Disqus