It took us 15 years, but nevertheless Investors have pushed the NASDAQ composite index to the 5000 level last night. Recording all time high and multi-year highs, have become a norm for the global equity markets and the reason behind this is simple – easing actions taken by the central banks around the globe. Central banks are leaving no stones unturned to boost the liquidity level in their markets and this in return is making the stock market to roar.
For central banks, it is very easy to get brawny points from the equity market, either they lower the interest rate or announce another liquidity package and the outcome is hefty returns by the equity market. If you love a contrary trade, perhaps now is the time to position yourself for such a trade, when almost most of the indices in the US and in Europe taking their turns to post a record high.
As for Australia, many investors were expecting that the reserve bank of Australia will show another aggressive hand last night and we could see another rate cut by the bank however, the officials have surely decided to see the results of their recent decision before they start the engine of rate cut again.
Back in Europe, only country which loves to stay in the headlines is Greece. Despite establishing a four month extension on their loan agreement, the finance minister of the country is making bold statements, and there is no shortage of counter statements from creditors either. Greece may face trouble to pay its expenses at the end of this month and the payment of 7.2 billion euro will only be showered by the creditors once the country has actually brought all the agreed reforms in action.
The Spanish economic minister has confirmed that the third bailout package for Greece could be anywhere between 30-50 billion euro, but what really concerns investor is, conditions which will be attached to that bailout package and drama around that event. When it comes to Greece, we are certainly not out of the woods and unless the country does take its reforms seriously and tighten up all the loose ends around its tax evasion, any global stock rally could be derailed no matter how hefty the bail out package is.