United States

According to CBA economist Michael Blythe there is a chance investors are overplaying the fears of a US downturn as while the short-term outlook remains tough a recession is no certainty.

US shares have staged the rally that was believed to be overdue, but headwinds remain, according to strategists at BCA Research.

The coming week should provide more news about Centro Properties, but above all a queue of major economic data in Australia and the US will capture the attention of investors this week.

These are testing times for market bulls. US shares continued their three week fall on Friday and the major share index in Australia might be testing critical technical support on Monday.

Goldman Sachs has joined the likes of Merrill Lynch in putting the odds of a US recession at 100%.

Commonwealth Bank has looked ahead to assess what is in store for the world economy in 2008, expecting the US will avoid recession and the Australian economy will again grow solidly.

The Dow managed to rise 38 points despite weak economic data, spurred on by the tech sector. The Nasdaq was up 1.5%.

The Dow lost 25 points in a volatile but thin session last night, following news the Chinese government had bought into Morgan Stanley.

The Dow closed up 65 points after the ECB injected no less than US$500bn in two-week credit.

Wall Street’s mood has turned decidedly sombre as fears of a recession gain further traction. The Dow fell 172 points.