The Market Wrap 31-1-14

By Jason Fittler

The market continues to be undecided.

*Quantitative Easing (QE) in the US has their market in a spin. The feds are now looking to slow down bond buying at a rate of $10 Billion a month. The aim is to ease out by the end of the year.

The injection of these funds in to the US economy has caused a liquidity bubble. The question is will it burst.

When we take into consideration all of our key indicators we expect that the market will be weak over the coming months heading towards June. In other words, we expect the market will go lower during this period.

This is due to US making adjustments and markets such as India, South Africa, Indonesia, Thailand, Argentina and Turkey raising interest rates to keep money in their countries.

The stress from the credit crunch is still playing out in these countries and as such will affect the world in the coming months.

This is not to say that Australian companies will suffer, but you can expect less overseas investment during this time.

Volatility brings buying opportunity.

*Definition: Quantitative Easing (QE) is the Federal Reserve's program of buying bonds from its member banks.