Weekly Reports | Mar 16 2012
By Greg Peel
A new leg to the rally, or a market overblown on misplaced enthusiasm? This is the question currently being asked around the globe, with views polarised and a few hearts in throats.
As at last night the S&P 500 has rallied 27.5% since its October low but as of yesterday, the ASX 200 has only managed 11% since its low marked in September. The local rally has been enhanced by yield sectors, with mining services the stand-out, while the Aussie dollar has acted as a drag on resources (along with rising costs), manufacturing and other industrials, and consumer discretionary simply continues to disappoint.
The strong Aussie will also have put off foreign investors who fear an A$ pullback on a stronger greenback, thus undermining any potential gains. Not so for yield stocks however, where the currency is worth the risk on the spread to US and other rates (as is the case for bonds).
The general consensus is that the local market needs some assistance from RBA rate cuts, yet when the RBA highlights “structural change” it's hard to see Stevens bowing to any concept of a two-speed economy. The minutes of the last RBA meeting will be released on Tuesday, which may provide more clues to the board's thinking. It's otherwise a quiet week for Australian economic data.
It's housing week next week in the US, with all of the monthly housing market sentiment, housing starts, existing home sales, new home sales, and FHFA house price index being released.
New Zealand will release its December quarter GDP on Thursday.
On the local stock front, Monday is again another big day for ex-divs, with a further smattering throughout the week, while tardy earnings reports will be released by Alacer Gold ((AQG)), David Jones ((DJS)) and Sigma ((SIP)).
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
