**30/11/10 - 8.29am - by James Gerrish**
We saw the Aussie market once again hold above 4582 - the level that seems to be offering a key level of support at the moment. Selling was quite aggressive in early trade before some optimism in Asian markets prompted buying, particularly in the banks.
It seems the US followed suit last night with the DOW JONES down more than 150 points at one stage before a late recovery saw the index finish just -39 points lower at 11052.
In London, the FTSE 100 was sharply lower with the index off by -117 points or -2.08% to close at 5550. Locally, SPI FUTURES are pricing in a drop of -28 points when trading kicks off this morning.
We're seeing very choppy trading conditions at the moment with investors torn between improving economic data from the States (US shoppers spent 6.4% more this Thanksgiving weekend than last year + Manufacturing is tipped to have its 16th straight month of improvement + Non-Farm payrolls due out Friday is expected to show a gain of 140,000 jobs) and concerns about the Eurozone.
Ireland has been the country in the spotlight recently with a bail out package worth $113 billion accepted over the weekend. In isolation, the issues is Ireland are pretty benign however its the trend that was started with Greece and could filter to other Eurozone Nations is the real issue. It also presents some significant concerns about the structural problems of 16 countries sharing the one currency. Is the bailout of Ireland just a band aid when the problems are structural, not cosmetic?
The elephant in the room I guess is Spain. Its economy is almost twice the size of Greece, Ireland and Portugal combined and I read a recent report that calculates its capital requirement in the next 3 years is more than $300 billion. In respect to Ireland and Portugal, they have no repayments requirements until April of next year so the short term (country specific) concerns have been resolved.
The larger issue in Europe seems likely to linger for the foreseeable future. One commentator on CNBC this morning was suggesting we'll see an "A" Class and a "B" Class Euro. Something to consider.
The market at the moment seems to be resilient. There is no clear trend which makes trading difficult however locally, that key support area of 4582 seems to be the key.
James Gerrish
(02) 9375 0117
