Bullish Stock Markets Set For New Records

U.S. and Asian stocks reached new record highs as the Japan’s Nikkei average soared by 2.8% on Tuesday morning. For the first time since June 2008, the Nikkei broke above 14 000 as the market played catch-up from an extended holiday. The strong U.S. jobs data eased concern over the health of Japan’s biggest export market. Japanese exporters such as Toyota, Honda and Sony led the rally, jumping more than 3%.

In the U.S., the S&P led by Apple and financials pushed further above 1600. The S&P has gained 13.4% since the beginning of the year. Decent earnings, together with monetary easing and low interest rates have helped the stock markets to achieve new records. As long as the world’s leading central banks are providing markets with liquidity, the stock rally is likely to continue - at least in the short term.

Asia is today focusing on Australia, where markets are waiting for the Central Bank of Australia’s decision on interest rate. Analysts are split on whether the interest rate would be lowered by a quarter point to a record low of 2.75%. A jump in stock prices are then predicted. Australian stocks fall 0.4% prior to the central bank’s verdict. The Asian Pacific, MSCI-index and the Korean Kospi are slightly down after big upward jumps on Monday.

In the currency market, the Euro is on the defensive with the EUR/USD trading at 1.3077. The head of the European Central Bank (ECB), Mario Draghi, yesterday stated that the ECB is monitoring economic data, and is ready to take further action if needed. Upcoming German elections in September made changes in austerity policies unlikely, in spite of Germany being under pressure from other EU-members.

While gold at USD 1465, is losing ground on continued outflows in holdings at the SPDR Gold Trust (the world’s largest gold backed exchange), crude and copper remain steady. Brent crude continues to trade above USD 105 a barrel.