Market Outlook for February 8, 2012
Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 8, 2012
Markets rallied yesterday for no apparent reason other than that the Greek government’s negotiations with the troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, hadn’t broken down irrevocably. Greek PM Papademos postponed a meeting with his coalition partners for the second consecutive day as terms for the second aid package remain unresolved. The expectation of the markets is that final terms are being completed for the EUR 130 billion rescue package today. The package has been under discussion since July and we are somewhat surprised at international investors’ patience and optimism. It appears that statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt have done the trick for now and the EUR rallied to as high as 1.3289 today.
In news that seems to have been largely ignored by the markets, Fed Chairman Bernanke made comments that the US unemployment rate understates the weakness in the US labour market and that he was particular troubled by the very high levels of long term unemployment. The USD continues to weaken across the board with the commodity currencies such as the AUD and CAD making strong gains.
Yesterday, the Dow Jones rose to its highest levels since May 2008 on hopes that the situation in Greece will soon be resolved as a final draft of the conditions of the second bailout package is completed. Coca Cola shares rose 1% on better than expected earnings and 7 out of 10 groups in the S&P 500 rose. The S&P 500 closed 0.2% higher at 1,347. Asian share markets rose more than 1% while European bourses are higher by 0.5% in mid session.
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