International markets spark a relief rally

15.08 AEST, Thursday 7 June 2012

International markets spark a relief rally

By Ben Taylor (Sales Trader, CMC Markets)

Overnight markets jumped above their 200 day moving averages sparking a relief rally. It’s actually hard to see the defining reason for the international rally. The market would have you believe that it was all about coordinated stimulus talk, however gold’s moves have you believing otherwise.

Rumours of European policy makers bailing out Spain’s banking sector and speculation of a Chinese rate cut are what I believe had the markets running hot.

The Australian market is currently going from strength to strength to the amazement of the international investment community. With inflation sitting low, employment numbers robust and growth rates the envy of the developed world we have a lot to be happy about.

Today’s employment numbers saw a surprise jump in full time jobs defying the current doom and gloom for all those that underestimated the strength of the domestic economy. Despite the jobless rate rise to 5.1%, 46,000 new full times jobs were created taking the string of new jobs created this year to 117k.

The Australian dollar has held onto its solid gains today as markets reduce their percentage bets on further interest rate cuts at the next meeting in July. The USD is also retreating from overbought levels improving the prospects for Aussie dollar strength.

The European economic catastrophe is the issue under the nails of the market. Further near term arguments for local interest rate drops will be more sensitive to international rather than domestic disturbances.
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