Markets: Poised For Another Rise As $A Hits New High, Again
A solid month for job creation in the US last month saw American shares end the first day of April with good gains, as did markets in Europe and parts of Asia.
Confidence jumped on the news that 216,000 new jobs were created in the US last month and investors on Friday ignored the glum news that there was no increase in wages (bad for consumption) and, indeed, wages in manufacturing contracted.
US employment grew solidly for a second month in March and the jobless rate hit a two-year low of 8.8% (8.9% in February).
April is usually a good month for US shares, so bullish analysts were straight into it after the jobs report, forecasting that the Standard & Poor's could hit its highest level in nearly three years in the coming week.
The Dow hit 12,419.71 in trading on Friday, the highest intraday level going back to June 2008. It ended up 57 points, or 0.46%.
The Standard & Poor's 500 rose 6.58 points or half a per cent to 1,332.41, and the Nasdaq Composite added 8.53 points, or 0.3%, to close at 2,789.60.
For the week, the Dow gained 1.3%; the S&P added 1.4% and the Nasdaq rose 1.7%.
Reuters says April is the best month for the Dow industrials going back to 1950, with an average gain of 2%, according to the Stock Trader's Almanac.
The S&P close on Friday represents double the 12-year low hit in March 2009 and is close to the 1,344 reached earlier this year which was the high for the year so far and the highest since June 2008.
Reuters said that around 7.4 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq on Friday, below last year's estimated daily average of 8.47 billion. Composite volume was the weakest for any week so far this year.
While the jobs report and other data have added to the bullishness abroad in the US, many analysts are starting to fret about the free money being turned off when the Federal Reserve ends its current bout of so-called quantitative easing at the end of June.
That could be see risky assets such as stocks and commodities (which have boomed because of the added liquidity provided by the Fed's $US600 billion of Treasury bond buying) sold off and market yields on US Treasuries rise.
It could also see the Australian dollar weaken.
The dollar ended at a near record close on Saturday in New York of $US1.0387, just under the latest all time high of $US1.0389 hit a few hours earlier.
The Australian dollar has been a big beneficiary of the cheap money investment binge around the world this year, even though fundamentals support a high value.
The $A started out on Monday at $US1.0250 before marking a five-day low of $US1.0205 early Wednesday morning.
In fact the Australian dollar touched new highs almost every day last week, culminating in the record on early Saturday morning. That saw it close up 1.8% over the week and a huge 27% from its low last May of 81.58 USc.
And it wouldn't surprise to see more highs touched in the coming week.
The Australian sharemarket will open higher today after the Share Price Index ended up 33% points on Saturday morning.
That was after the local market rose for a fourth straight day on Friday, thanks to strong demand for resource stocks.
The benchmark ASX200 share index added 23.9 points, or 0.5%, to close at 4861.8 points, while the All Ordinaries added 26 points, or 0.5%, to 4954.6 points.
For the week, the ASX200 index was up 2.5%, making a 5% gain in the past two weeks.
In Europe the Stoxx Europe 600 Index rose 1.5% last week, adding to the previous week's 3.1% rise.
Bloomberg said that indexes climbed in all 18 western European markets, except Greece and Italy.
The UK’s FTSE 100 rose nearly 2%, Germany's DAX jumped 3.4% and France’s CAC 40 rose 2.1%. Greece’s ASE Index lost 5.9%.
Banks in peripheral countries, such as Greece, Ireland and Portugal rose despite Moody's warning that it could not rule out further credit downgrades for the euro-area nations, saying last month's agreement by the European Union on a permanent bailout fund failed to go far enough.
Standard & Poor's cut Portugal and Greece’s debt ratings and also cut Ireland’s credit rating after yet another bailout of the banks in that country ($US34 billion).
Fitch has put Ireland on creditwatch for a possible downgrade.
That was despite senior bondholders in the banks again escaped the threat of losses at the direction of the European Central Bank.
In Asia the MSCI Asia Pacific Index was little changed on Friday at the close and was up just over 1% for the week.
Japan’s Nikkei 225 index lost half a per cent on Friday and gained 1.8% over the week, despite no sign of any improvement in the Fukushima crisis.
Australia’s ASX 200 Index was up 2.5% and Hong Kong’s Hang Seng Index advanced 1.2% and 2.8% for the week.
China’s Shanghai Composite Index climbed 1.3% on Friday as surveys confirmed that the country's manufacturing growth sector continues to show some growth.
South Korea’s Kospi Index rose 0.7% to a record close as the country’s inflation climbed to the highest level in 29 months and exports reached a record in March, adding pressure for another interest rate increase.
And Thailand's SET Index climbed 1.6% to the highest since October 1996.
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