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IG Markets Afternoon thoughts

IG Markets Afternoon thoughts

Across Asia, regional markets are mostly higher, shrugging off the weaker overnight leads after President Obama’s jobs creation plan spurred optimism, sending US futures higher. The Hang Seng and Shanghai Composite are the best performers, both up 0.2% while the Nikkei 225 is flat. The Kospi is 0.8% softer.

In Australia, the ASX 200 is currently 0.6% firmer at 4212, having earlier reached a high of 4232. While US markets sold down late in the day after Bernanke’s speech, the local market has responded positively to President Obama’s jobs package announced prior to the commencement of trade. With the President’s address inspiring some risk appetite we are seeing some modest gains across the energy, materials, industrial and financial sectors. The defensively orientated healthcare and property trust sectors are the only sectors in negative territory.

It’s been a pretty encouraging response to President Obama’s jobs creation plan. The headline number was better than expected as the market had been talking about a US$300b plan; it came in at US$447b. For the market to be holding gains on a Friday afternoon is reasonably impressive, especially ahead of the G7 meetings over the weekend.

There’s a long way to go with the jobs plan but it certainly looks like the ideas are pointing in the right direction The market is cautiously optimistic although it’s yet to be seen how the republicans react to it. The fact that Obama is looking to change the tax mix is certainly going to help get it through congress. It’s going to be a bit of a ‘wait and see’ game now.

Tonight, it will be very interesting to see how markets react as they digest the finer details of Obama plan. There is also going to be a lot of talk about the G7 meeting taking place in France over the weekend. There is some speculation suggesting we could see a joint policy response to help ease the uncertainty plaguing investor’s minds.


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