Markets settle back to hard slog

10.06 AEDT, Tuesday 26 March 2013

Markets settle back to hard slog

By Ric Spooner (Chief Market Analyst, CMC Markets)

The share market will be weaker this morning, despite the fact that, from the perspective of this time last week, the outcome on Cyprus’s debt bailout is a lot better than it may have been. With Cyprus out of the way as a short term issue, investors are left to ponder whether the market represents good value at current levels.

While Cyprus has been removed as a source of potential short term crisis, this episode has served to keep investors cautious about risk. It’s a reminder that Europe lacks the institutional framework to regulate banks and deal with problems as they arise. Issues are being dealt with in crisis mode and are highly subject to the risk of failure due to the different political imperatives of creditor and debtor nations.

Europe remains a potential issue for markets this week, with the situation on Italy’s government remaining uncertain. Against this background, and with the S&P/ASX 200’s PE value above long term average levels, investors are likely to adopt a cautious mode leading into the Easter holiday.

http://www.cmcmarkets.com/

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