Market Wrap 16-3-12

By Jason Fittler

With the US recovery now started, we find our market back this week knocking on the door of 4300. 

The US has reported a fall in unemployment and an increase in the retail spending which has seen their market put on nice gains for the week with the Dow Jones closing above 13,000 points. There is a lot of positive talk coming out of the US right now. 

Although this improvement in the US does not directly relate to an improvement in the Australian markets, it provides us with a better long-term picture. Given the size of the US and its economic reach an improvement in the US will over time filter through to all markets. 

Back home, our big concern is the slowdown in China although this is not as big as it is made out to be. We all knew that China was slowing; if you put in context to the demand that they have for our exports compared to historical demand we have nothing to worry about short-term. Long-term we expect that India will open up providing a new export market.

On the 17/02/2012 I wrote about the Australian Dollar due to start to pull back with the strength in the US we are now starting to see this take place with the dollar topping at $1.08 and closing this week at $1.05. I expect to see the dollar pull back under the $1 mark in the coming 12 months. 

Over the past month, we have seen two very successful capital raisings. 

  • Cardno where the share price moved from $5.50 to $6.70 the rights cost $4.90. 
  • QBE moving from $11.60 to close at $13.14 on the back of its Share Purchase Plan…  cost of the shares under the plan is $10.70. 

These sorts of movements highlight how undervalued our market truly is…  as such there are still plenty of good opportunities to buy at the current level. 

For more information on any of the above please contact us on 07 4771 4577. 

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