Investors wait in the wings

Russia is  closer to defaulting on its economic obligations despite a small improvement in the...
Russia is closer to defaulting on its economic obligations despite a small improvement in the value of the rouble. Photos by Reuters.
A slew of data being released in the United States this week is likely to spark some investor action in what is normally a quiet holiday week here and abroad, Craigs Investment Partners broker Peter McIntyre says.

The New Zealand market was quiet yesterday, but Mr McIntyre said the mood remained buoyant as Wall Street started its week today at record highs.

''Investors continue to see room to move higher as the US economy performs while central banks remained supportive.''

With economic growth said to be at an annualised rate of 5%, that represented ''massive growth'' for the US economy.

The latest US economic in the holiday-shortened week included the Dallas Federal manufacturing survey, the S&P Case-Shiller home price index and consumer confidence, weekly jobless claims, the Chicago performance in manufacturing index and consumer confidence, the pending home sales index as well as construction spending due on Friday.

''I would be surprised if any of the data is weak or catches the market unawares.''

As the year wound to a close, it was worth noting both the Dow and S&P 500 closed last week at record highs. In the year, the Dow advanced 11.5%, the S&P 500 added 15.3% and the Nasdaq gained 16.5%.

US treasuries were on track for their best performance since 2011, according to Bloomberg.

Mr McIntyre said the treasury bonds presented a lot of value in light of the US dollar increasing in value against some global currencies, helping restrain inflation. But trading was volatile, affected by oil prices and weak demand.

The trajectory of recent economic growth in the US suggested the Federal Reserve could begin tightening monetary policy next year.

''What happens this week depends on how the market views the data. Bad data can be good for the market as investors see a low interest rate environment better for share investments. Good news may mean the Fed raising interest rates earlier than expected.''

The state of the US markets meant a good future for US companies listing in the third and fourth quarters of the year, he said.

In Europe, attention had turned to the third and final round of Greek presidential elections.

Greek Prime Minister Antonis Samaras must secure enough support in parliament for his candidates to avoid early general elections and a potential victory of the anti-bailout Syriza party.

Mr McIntyre said the result of the election was a major concern to the euro zone as what happened would feed into the rest of global markets.

China's trade would grow 3.4% in the year ended December, implying the country would fall short of a current 7.5% official growth target, he said.

The weak Chinese data spurred speculation the central bank would implement more measures in a bid to keep the economy from starting to slow.

The Chinese property market was again being called a cause for concern, something which kept being repeated in times when markets ran out of bad news to talk about, Mr McIntyre said.

There was some indication the Chinese Government would introduce fiscal stimulus similar to that seen in the US to try to spark economic growth.

Russia could be on the verge of defaulting on its economic obligations as the oil price continued to slide and sanctions remained, he said.

The International Energy Agency again downgraded its price growth forecast for oil and gas, leading to another fall in price over the weekend.

Russia's economy was based on oil and gas prices and the country was getting dangerously close to becoming like Argentina in nearing default without some help, he said.

dene.mackenzie@odt.co.nz

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