Stocks around the world are starting to seem like they will be consolidating recent gains in light of optimistic reports and and data release from the Fed and earnings statements. Most major companies seem to be performing well and the Fed has made it apparent that the Fed is ready to intervene if there are any major problems.
The FTSE All-World equity index has gone up 0.3 per cent; the FTSE Eurofirst 300 has risen by 0.1 per cent and S&P 500 futures suggest Wall Street will add 0.2 per cent to the previous session’s solid gains.
While the tone on Wall street is for the most part positive, traders are still rather cautious. Copper is up 0.7 percent to $3.73/ounce and gold has risen 0.3 percent to $1648/ounce. Investors still seem to be putting money into “safe havens”, with U.S. bonds at 1.93 percent, near record lows. Investors normally invest in U.S. bonds when it is perceived that there is trouble in the economy.
Traders probably remain cautious due to the volatile week that has taken place so far. On Monday, stocks fell sharply due to serious worries about the eurozone. However, on Tuesday, some of these worries were dissipated due to some solid sovereign debt auctions. This means that the eurozone should be in “the safe zone” for at least now. The success of the auctions means that the E.U. countries can continue to finance their debt.
The yield for Spanish 10-year-bonds, is now at 5.8 percent, significantly lower than the 6.05 percent rate seen a few sessions ago. The euro has also risen .1 percent $1.3236, near 3 week highs.
Also supporting the positive sentiment is the global earnings reports from companies. Most of the reports have been either acceptable or exceeded expectations. The latest report supporting the idea that the U.S. economy is on track is Apple, which far exceeded analysts expectations with 35 million in iPhone sales and stronger than expected revenue, profits and margins
In addition to all of this positive data, the Fed, in recent meetings, have made it somewhat clear that they are willing to intervene if there are any major declines in the U.S. economy. They have also stated that the currently low Fed loan rate will remain in place until mid 2014. With all of this information, it seems that the outlook for growth in the near future is quite bright.