(MONDAY 31ST OCTOBER - JAMES GERRISH - 7.19am)...The DOW JONES added +22pts on Friday while the S&P 500 put on +0.04%. European mkts were mixed (FTSE down -0.2%, German DAX up +0.13%, French CAC down -0.59%) while locally, the SPI FUTURES mkt is pricing a marginally higher open up +13pts when trading kicks off here this morning.
On Friday, the S&P/ASX 200 added +5pts or 0.12% to close at 4353.
DOW JONES - A relatively quite night on Friday in the US with the DOW trading in the tightest range for a number if weeks. After such a big move from the recent lows, its positive to see things quieten down after a technical breakout on most major indices. My gut feel is that we'll hang around current levels for a while and consolidate which would be a healthy outcome.
They'll still a lot of skepticism around the European plan and no doubt focus will turn the other peripheral's - namely Italy and probably France. These are certainly larger member nations and its unlikely that the EFSF would have the capacity to act as a back stop if we saw a run on their bonds. That's an important aspect to consider and we'll keep a close eye on the bonds of Italy, Spain, Germany, Portugal, France etc over the coming months.
S&P/ASX 200 - Some selling came into play on Friday after a pretty strong open to trade. There is obvious concern (from what I'm reading over the weekend) about the sustainability of the European plan but from my perspective, I don't argue with a trend. The break from resistance in the DOW and the ASX 200 indicates a change of trend so we'll respect it for now.
EUROPEAN BONDS - higher bond yeilds are an indication of risk and so its essential we keep up to speed with the implied risk the mkt is placing on European debt. One of the interesting charts below, is that of Ireland. Ireland were in trouble and received assistance however it seems they are successfully administering austerity and reducing their perceived sovereign risk and bond yields are falling. This is what we want to see with the other charts below.
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