Market paradise lost
Published in the Daily Telegraph, August 2009 by Jenny Dillon
Contrary local investors to ignore Wall St’s gains
After last week's performance, the markets could open today any which way. Normally, investors would expect it to open higher, taking the lead from US markets which closed up, the Dow Jones index gaining 155.91 points, or 1.67 per cent, to 9505.96.
But last week, after strong leads from Wall Street, local markets splashed red everywhere as Telstra, banks and resources felt. The S&P/ASX200 index fell 86.9 points, or 1.99 per cent, to 4290.6 points and the broader All Ordinaries index dropped 85.7 points, or 1.95 per cent, to 4305.7.
Two things may keep the local markets in line. The first was US Federal Reserve boss Ben Bernanke claiming on Friday prospects for a global financial recovery “appear good". The second was likely healthy company reports in coming weeks.
CommSec chief economist Craig James said Friday's performance was profit taking and the weekend would have allowed things to settle down.
"We've certainly had a very good lead in from Wall Street; we've got gains in the gold price, oil and base metals prices; and more optimism about the US economy," Mr James said, and added company earnings had been optimistic. "Certainly, the analysts had been much too gloomy, and the companies have been very aggressive in terms of cutting costs and supporting the bottom line."
But Wealth Within senior analyst Dale Gillham said the past three days showed ""strong signs of indecision" and argued for conservatism.
"Right now it [would be] wise to be conservative and to sit back and watch until we can confirm which direction the market will travel in the short term." Mr Gillham said.
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