Unemployment Soars, the Dollar Falls, Investors are Still Optimistic

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Unemployment Soars, the Dollar Falls, Investors are Still Optimistic

Post  harpal1980 on Mon Nov 09, 2009 10:53 am

Investor and traders were fairly optimistic last week as market participants pushed stocks and various currency pairs higher on beliefs that global growth has returned to the forefront. The broader market, S&P 500 Index, gained 3.2% for the week closing at 1069. The Dow Industrial Average regained ground above 10,000, showing investors that despite the unpleasant data stocks are holding up. The strong correlation between the dollar and the equity markets continued, and although gold pushed to new all time highs, the majority of the commodity complex lost ground during the week.

The markets started the week on a positive note as news in Asia, US and Europe showed that the manufacturing sector was improving. The readings in all the regions were better than expected and all signaled manufacturing expansion.



On Tuesday the markets continued to remain subdued even after the Reserve Bank of Australia raised its benchmark interest rate a quarter of a point signaling continued strong growth prospects in Australia. Central bank Governor Stevens said that “rates could continue to climb gradually”, words that signaled to the market that inflation was well contained.

On Thursday the markets received additional positive news from Europe which contributed the powerful rally in the equity markets. The European Commission released new forecasts that generally better than its previous releases. The EC now expects the euro zone economy to expand by 0.7% next year. This was a vast improvement, especially as officials previously thought that the region's economy would contract by 0.1%. One must note that the IMF is less sanguine and forecasts a 0.3% expansion next year, half of what the EC envisions. The EC places this year's contraction at -4%, while the IMF see it a tad deeper at -4.2%. The EC sees unemployment rising to 10.7% in 2010 and the IMF 10.9% in 2011.

Read the full article at Dodjit.com

harpal1980

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