The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country. Abraham Lincoln |
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Financial Market Bulletin Jan 16th 2012
This week’s Bulletin which contains the following points:
Positive economic data from the US gave a boost to markets last week, encouraging hopes that the world's largest economy was still on track to grow at around 2.5% this year.
In Europe, successful government bond sales by Spain and Italy also went down well with investors with both auctions oversubscribed, enabling yields to fall back and soothing investors’ concerns.
However on Friday, rumours of a possible downgrade by agency Standard & Poor's for France and Austria, took some of the shine off share prices as markets reacted to the news. S&P confirmed the downgrades only after the close of markets. Notwithstanding the response today by the markets has been muted, implying that the 'news' has already been discounted.
Greece also took centre stage on Friday as talks with its international creditors, who have been taking a tougher line, broke down; although Athens said that it was confident a solution would ultimately be worked out.
The downgrades for France et al mean that the firepower of the eurozone's bail-out fund - the EFSF - might be diluted as it calls into question the ability of contributing members to underwrite the guarantees given by the fund.
Overall reaction from the European financial markets has been muted even though Asian markets fell around 1% after playing 'catch-up' from Friday, giving further grounds for believing that investors were expecting the downgrades and that Greece will do a deal with its creditors.
The case for the eurozone surviving is reflected on by THS Partners who believe the region will ultimately become one of the world's great growth opportunities.
As the Bank of England once more holds interest rates at 0.5% savers are given no respite and we look at why investors should continue to look at the case for equity income investing as part of the solution.
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( The complete text of this weeks Financial Bulletin can be downloaded as a 'pdf' file here. )
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Extract from this weeks Financial Marketing Bulletin, issued by RBA Wealth Management Ltd.
To see the full Financial Briefing Note and to sign up to receive them automatically each week
visit their web site : www.rbawealthmanagement.com or call 01889 568444
