The Market Wrap Friday 17th September 2010

By Jason Fittler

4800 here we come!

The market has finally made a positive move above 4500 moving to a higher high this week.

Fair value for the market is 5200 and although we are a long way from there, 4800 is not unexpected.

We are seeing good reports coming out of the USA on retail sales; retail food, technology and the major blue chip stocks are forecasting improvements.

The concern at present is the new liquidity levels required for banks in the US and this may spur another round of capital rising.

Back here at home our banks already comply with the new requirement and are in fact lobbying for the government to ease the liquidity requirements for Australian Banks.

With improved economic conditions around the world comes inflation, inflation brings interest rate hikes.

We have seen a decline in house hold debt over the past quarter indicating that Australians are looking to pay down debt.

Very smart move, we can expect to see interest rates raise next month combined with banks tightening lending practices will put a strain on the housing sector.