Mixed signs from overseas for local market

THE sharemarket may open slightly higher today, despite weakness on European markets and a mixed performance on US markets.

By InvestSMART · 30 Jan 2012

By InvestSMART ·
30 Jan 2012

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THE sharemarket may open slightly higher today, despite weakness on European markets and a mixed performance on US markets.

European markets fell on Friday amid concerns about Greece's ability to cut its debt and disappointing figures on US economic growth.

In the US, markets were mixed after the government reported that the US economy grew at a slower rate at the end of last year than economists had expected. Economic growth for October through to December came in at an annual rate of 2.8 per cent, lower than the 3 per cent hoped for by economists.

On Wall Street, the Dow Jones index fell 74.17 points, or 0.58 per cent, to 12,660.5. The S&P 500 dipped 2.1 points, or 0.16 per cent, to 1316.33 but the Nasdaq index rose 11.27 points, or 0.4 per cent, to 2816.55.

The CommSec chief economist, Craig James, said US markets had mixed results on Friday but prices for base metals and gold were up.

"It creates some conflicting signals for [the Australian] market," Mr James said.

He said many investors would be focused on the strengthening Australian dollar, which was now worth more than $US1.06. "That's going to put pressure on some of the globally dependent stocks," he said.

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Frequently Asked Questions about this Article…

Will the Australian sharemarket open higher today?

According to the article, the sharemarket may open slightly higher today despite weakness in European markets and mixed US market performance.

Why did European markets fall recently?

European markets fell amid concerns about Greece's ability to reduce its debt and after disappointing figures on US economic growth, as reported in the article.

How did US markets perform and what happened to major US indexes?

US markets were mixed: the Dow Jones fell 74.17 points (0.58%) to 12,660.5, the S&P 500 dipped 2.1 points (0.16%) to 1,316.33, and the Nasdaq rose 11.27 points (0.4%) to 2,816.55.

What was the US economic growth (GDP) rate for October–December and how did it compare with expectations?

The US economy grew at an annual rate of 2.8% for October through December, which was lower than the 3.0% rate many economists had expected.

What did CommSec chief economist Craig James say about recent market signals?

Craig James noted that US markets produced mixed results while prices for base metals and gold were up, creating some conflicting signals for the Australian market.

How is the strengthening Australian dollar affecting Australian stocks?

The article says the Australian dollar strengthened to more than US$1.06, and that stronger AUD is likely to put pressure on some globally dependent Australian stocks.

Which asset prices were reported as rising despite mixed equity markets?

The article reports that prices for base metals and gold were up even though equity markets showed mixed performance.

What should everyday investors watch based on the article's market update?

The article suggests investors should pay attention to European market sentiment (especially Greece-related news), US economic growth data, movements in base metals and gold, and the strength of the Australian dollar, since these factors are creating mixed signals for local markets.