Dow hits 5-year high despite budget mess

Beware of the latest share-buying spree Source: Supplied

THE Dow Jones Industrial Average reached a new five-year high overnight as investors looked past the risks to the economy of impending federal spending cuts and bid up equities.

The Dow jumped 35.17 points (0.25 per cent) to 14,089.66, less than 100 points from all-time high of 14,164.53 on October 9, 2007, ahead of the markets crash and the Great Recession.

The broad-based S&P 500 increased 3.52 (0.23 per cent) to 1518.20, while the tech-rich Nasdaq Composite Index gained 9.55 (0.30 per cent) to 3169.74.

Overnight trading came as $US85 billion ($83.67 billion) in spending cuts were to begin taking effect, as Washington policy makers failed to agree on a compromise for a more moderate deficit reduction program.

"Markets are learning to deal with this kind of uncertainty and so they don't get rattled around with every gyration in fiscal policy," said Paul Edelstein, an economist with IHS Global Insight. "US data has been very good this week and monetary policy has been very supportive."

Fresh data that showed consumer spending rose in January at double the rate of December, despite lower personal income.

Markets were further cheered by a report that showed US manufacturing activity hit the highest level since 2011. Of the 18 manufacturing industries surveyed, 15 reported growth, compared with 13 in January.

Apple shares tumbled 2.5 per cent after a US judge invalidated some $US450 million of a $US1 billion award to be paid by Samsung to Apple in a much-watched patent lawsuit. More litigation in the case is expected.

Best Buy picked up 4.0 per cent after it topped earnings expectations, even as it reported a decline in same-store sales.

Separately, the company announced that the deadline had passed for founder Dick Schulze to submit his expected offer to buy the company.

Clothing retailer Gap climbed 2.8 per cent after reporting profits and revenues above forecast levels, and boosting its dividend.

Deckers Outdoor, which sells the popular UGG and Teva brands of shoes, soared 15.4 per cent after announcing record annual revenues.

Groupon, the online discount coupon distributor, rebounded 11.4 per cent after yesterday's 24.3 per cent plunge on forecasts of continuing losses in the current quarter. The company replaced its chief executive with a management team from the board of directors.

Bond prices rose. The yield on the 10-year Treasury bond declined to 1.85 per cent from 1.89 per cent yesterday, while the 30-year retreated to 3.07 per cent from 3.09 per cent. Bond prices and yields move inversely.

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Shares highest since Sept 08

THE Australian share market has reached a fresh four and a half year high. Picture: File Source: Supplied

THE Australian share market has reached a fresh four and a half year high, buoyed by improved investor sentiment towards the Italian election outcome.

At the close on Thursday, the benchmark S&P/ASX200 index was up 67.5 points, or 1.34 per cent, at 5,104.1.
The index reached an intraday high of 5112.5 minutes before closing time, touching the highest level reached since September 2008.

The broader All Ordinaries index was up 67.3 points, or 1.33 per cent, at 5,120.4.

On the ASX 24, the March share price index futures contract was 66 points stronger at 5,087 with 32,850 contracts traded.

IG Markets dealer Chris Weston said the Australian market followed Wall Street higher after an Italian bond auction posted strong results.

"We saw a much improved Italian bond auction, which gave a green light to traders globally to buy stocks in the face of a dark political situation there," he told AAP.

"There's no reason why this market can't keep going higher."

The big four banks benefited, with the Commonwealth Bank closing $1.26, or 1.91 per cent firmer, at $67.27 and Westpac adding 57 cents, or 1.89 per cent, to $30.77.

National Australia Bank put on 17 cents to $30.20 and ANZ gained 44 cent to $28.72.

Supermarket giant Woolworths was closed 92 cents higher at $34.93 after announcing a first half net profit rise of 19 per cent to $1.15 billion.

Retailer Harvey Norman added 21 cents, or 9.21 per cent, to $2.49 despite a 36 per cent drop in half year profit from weaker sales and falling property values.

Mr Weston said the strong performance of the discretionary sector boosted investor confidence in Harvey Norman, as it forecast strong sales growth.

"The discretionary sector's clearly the best performing sector this year," he said.

"It's been ages since we've seen any positive rhetoric coming from that company."

The spot price of gold in Sydney at 1620 AEDT was $US1,597.10 per fine ounce, down $US13.07 from Wednesday's local close of $US1,610.17 per ounce.

National turnover was 2.24 billion securities worth $7.13 billion, with 603 stocks up, 423 down and 352 steady.
 

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CEO memo to staff: 'I was fired today'

• Daily Deals site fires CEO Andrew Mason
• Mason posts a memo to all staff online
• Groupon fires CEO Andrew Mason

GROUPON CEO has just posted an honest memo to staff online explaining why he's been fired.

The daily deals site announced today that it is replacing chief executive Andrew Mason, after the struggling daily deals firm's share price plunged 24 per cent yesterday.

Mr Mason posted a note to staff online explaining why, after four and a half years, he was given the boot.

Here's the memo he posted:

(This is for Groupon employees, but I'm posting it publicly since it will leak anyway)

People of Groupon,

After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today. If you're wondering why... you haven't been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we've shared over the last few months, and I've never seen you working together more effectively as a global company - it's time to give Groupon a relief valve from the public noise.

For those who are concerned about me, please don't be - I love Groupon, and I'm terribly proud of what we've created. I'm OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I'll now take some time to decompress (FYI I'm looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I'll figure out how to channel this experience into something productive.

If there's one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what's best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness - don't waste the opportunity!

I will miss you terribly.

Love,

Andrew

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Groupon fires CEO after share plunge

Source: AFP

GROUPON says it's replacing chief executive Andrew Mason, who says he's been fired, following the struggling daily deals firm's share price plunge of 24 per cent after bad quarterly results.

The company says executive chairman Eric Lefkofsky and vice chairman Ted Leonsis will take over the post of chief executive, effective immediately, and Groupon "will continue to invest in growth."

The board thanked Mason, a founder of Groupon, and said it was searching for a new chief executive.

"Andrew helped invent the daily deals space, leading Groupon to become one of the fastest growing companies in history," said Lefkofsky on Thursday.

Leonsis said: "Groupon will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future."

Mason, in a letter to employees, said he was "fired" but remained upbeat about the company.

"I love Groupon, and I'm terribly proud of what we've created," Mason said.

"I'm OK with having failed at this part of the journey.

"If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through."

Sentiment has been souring on Groupon, which made a splash with its 2011 stock market debut but has been dogged by fears of "deal fatigue," and worries about its profitability as well as accounting questions.

"We believe uncertainties with Groupon remain due to staff turnover, competition, and increased investments," said a note earlier Thursday from Edward Woo at Ascendiant Capital Markets.

"In our view, the slowing growth and weak margins are likely to bolster continued scepticism as to Groupon's valuation, growth prospects, and profit potential."

Groupon's shares slumped to $US4.53 at Thursday's close, a 77 per cent drop from its public offering price of $US20 in November 2011.

Scott Devitt at Morgan Stanley said Groupon's mission appears muddled now that it has moved into new services such as direct sales to consumers, and not just coupons for discounts with merchants.

"We continue to believe Groupon is a local ecommerce leader. However, we remain on the sidelines as the company experiments with myriad operating levers and strategies," the analyst said.

"We would become more constructive on the stock if we could better understand Groupon's ability to integrate the product companies it has acquired with the internally developed projects.

The Chicago-based firm reported a loss of $US81 million ($A79.74 million) in the fourth quarter and a $US67 million dollar deficit for the full year.

The loss translated to 12 US cents per share in the quarter, compared with expectations of a profit of three cents a share.

With the daily deals sector fading fast, Groupon also offered a weak revenue outlook of $US560 million to $US610 million, well below market expectations of $US650 million.

Groupon shares were listed on the Nasdaq in 2011 in a blockbuster public offering that raised $US700 million and triggered fears that investors were overvaluing hot internet startups.

The troubles at Groupon come amid ongoing woes at number two sector member LivingSocial which is also losing money.

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Bernanke: sequester would hit US recovery

US Federal Reserve Chairman Ben Bernanke. Pic: AP/Manuel Balce Ceneta Source: AP

US Federal Reserve Chairman Ben Bernanke is warning 85 billion US dollars worth of spending cuts in the March sequester would place a significant burden on America's economic recovery.

Bernanke says Congress and the Obama administration should consider replacing the sharp cuts required by the sequestration, with policies that reduce the federal deficit gradually.

He highlighted data from the Congressional Budget Office, which is projecting the cuts would reduce potential economic growth by point-six per cent.

The cuts are due to be implemented over the next seven months if no moderate substitute program is agreed on.
 

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Shares up slightly despite Europe sell-off

The Australian market has closed higher after strong offshore leads and firmer earnings reports domestically. Live updates

4.01pm: AT THE CLOSE: The Australian share market has closed higher after strong offshore leads and firmer earnings reports domestically.

At the close on Wednesday, the benchmark S&P/ASX200 index was 33 points, or 0.66 per cent, higher at 5,036.6 while the broader All Ordinaries index was up 31.3 points, or 0.62 per cent, at 5,053.1.

On the ASX 24, the March share price index futures contract was 40 points stronger at 5,017 with 23,247 contracts traded.

Here's some of the big movers on the market today:

• AGK - AGL ENERGY LTD - up 68 cents at $15.87
• AGL Energy's acquisition of a major Victorian power plant has contributed to a significant rise in first half profit to $365 million.
• AGO - ATLAS IRON LTD - down 6.5 cents at $1.48
• BHP - BHP BILLITON LTD - up 34 cents at $36.69
• FMG - FORTESCUE METALS GROUP LTD - down one cent at $4.60
  Iron ore miners Fortescue Metals Group, Atlas Iron and BHP Billiton have evacuated staff and locked down operations in Western Australia as wind gusts strengthen to 230km/hour near the centre of Cyclone Rusty.
• JHX - JAMES HADRIE INDUSTRIES PLC - up 15 cents at $9.50
  Building products group James Hardie has trimmed its earnings forecast for the year, saying conditions in the housing market remain uncertain.
• MAH - MACMAHON HOLDINGS LTD - down one cent at 33 cents
  Mining services company MacMahon Holdings will post a loss of up to $20 million this financial year because of its troubled construction business.
• MTS - METCASH LTD - down one cent at $4.03
  Grocery wholesaler Metcash has named the head of a New Zealand discount retailer, Ian Morrice, as its new chief executive.
• PMP - PMP LTD - up 1.5 cents at 21.5 cents
  Printing and distribution business PMP will continue to sell off assets in 2013 as it tries to recoup money lost from changes to the media landscape.
• PRT - PRIME MEDIA GROUP LTD - up 1.5 cents at $1.05
  The federal election campaign should breathe new life into a challenging television advertising market, regional broadcaster Prime Media Group says.
• SGH - SLATER & GORDON LTD - up four cents at $2.40
  Law firm Slater & Gordon has lifted its half year profit by 61 per cent, partly thanks to a successful marketing campaign and expansion efforts in the UK.
• SYD - SYDNEY AIRPORT - up six cents at $3.20
  Sydney Airport has swung back into profitability as retail and car parking revenue grew and airlines added more flights.
• UGL - UGL LTD - down 60 cents at $10.30
  Engineering firm UGL's first half profit has slumped by 53 per cent due to $25 million in costs from a restructure.
• WDC - WESTFIELD GROUP - up six cents at $11.14WRT - WESTFIELD RETAIL TRUST - up five cents at $3.19
  Shopping centre developer Westfield Group's annual profit has grown by 18 per cent as income from its centres across the world increased.
• WTF - WOTIF.COM HOLDINGS LTD - down 47 cents at $5.37
  Wotif Group says its first half profit is down five per cent, partly due to a global decline in travel.

2.30pm: Australian shoppers may be ready to start splashing their cash again as solid savings rates and low inflation lifts consumer confidence, Westfield boss Peter Lowy says.

Mr Lowy made the comments as the shopping centre giant posted an 18.3 per cent rise in annual profit.

He said while there were always external factors which could influence retail sales, current conditions in the
Australian economy pointed to an improvement during the year.

"Retail sales have been relatively flat for three or four years," he told AAP. "There has been a very high savings rate in Australia and that has stabilised now, you see higher consumer confidence than you've seen before.

1.50 pm: A deep drop in hotel bookings across Asia, Europe and the United States has dragged down earnings at online travel agency wotif.com.

The group's first half net profit fell 4.6 per cent as revenue from hotel bookings in Asia and other countries dropped by nearly a fifth.

Wotif fared better at home, with a one per cent rise in revenue from accommodation bookings in Australia and New Zealand.

Revenue from flight sales also rose 11 per cent despite the lacklustre local retail conditions.

Investors were disappointed with the result, pushing wotif's shares down by more than 10 per cent in early trade.

1.11pm: Steady growth forecast for economy
Global credit rating agency Standard & Poor's expects Australian economic growth will remain close to trend in coming years, as public debt peaks at a low level.

But S&P, which rates Australia at a top ranking triple-A with a stable outlook, says the local economy does have vulnerabilities.

"The economy holds a large amount of offshore debt, households retain substantial debt because of high house prices and its banks are reliant on foreign investor funding," associate director Craig Michaels said.

12.35pm: Stocks continue to rise
The Australian share market continued to rise in morning trade after a strong session on Wall Street and the release of mostly encouraging earnings reports locally.

At 12.03pm AEDT today, the benchmark S&P/ASX200 index was up 31.1 points, or 0.62 per cent, at 5034.7 points, while the broader All Ordinaries index was up 30.4 points, or 0.61 per cent, to 5052.3 points.

On the ASX 24, the March share price index futures contract was up 37 points at 5015 points, with 14,085 contracts traded.

"Corporate reports seem to be okay today, and reporting this month has been in line with expectations, with the odd surprise and the odd disappointment," Burrell Stockbroking director Richard Herring said. "So, it's been quite encouraging, given the wider market's expectation of complete disappointment, in terms of earnings."

11.32am: ABS figures just out
Total construction work done in Australia fell 0.1 per cent in the December quarter, according to official data.
The median forecast among economists was for total construction work done to have risen 1.5 per cent for the quarter.

Over the year to the December quarter, the volume of construction work done was up 11.9 per cent, the Australian Bureau of Statistics said on Wednesday.

The ABS said total building work done in the December quarter, including homes and non-residential buildings
like offices and shops, rose 1.8 per cent from the September quarter.

Engineering work done, which includes mines, roads, bridges and the like, was down 1.3 per cent in the quarter.

11.10am: Dollar edges higher against Euro
The dollar edged higher against the euro after Ben Bernanke confirmed the US Fed's stimulus program would continue, while the yen traded flat ahead of the nomination of a new Bank of Japan chief. At 09.00 AEDT the euro was at $1.3061, compared to $1.3065 late on Monday.

11.05am: Here's some of the biggest losers and gainers from CommSec:

10.55am: Positive comments from Ben Bernanke yesterday in relation to quantitative easing (pumping money into the system) gave investors confidence and is having a knock on affect on our markets after yesterday's sell-off.
IG Markets analyst Stan Shamu said:

"We did see a massive turnaround in US trade, triggered mainly by some better than expected economic data, with consumer sentiment coming in much stronger than expected. Especially with (US Federal Reserve Chairman) Dr Ben Bernanke coming out with that testimony (to Congress), that really calmed investors' nerves about quantitative easing. It certainly seems like we've got some positive momentum behind us."

10.40am: From the companies reporting today:

• Westfield Group gained 12 cents, or 1.08 per cent, to $11.20.
• James Hardie's stocks were also up 12 cents, or 1.28 per cent, to $9.47 at 1033 AEST
• AGL Energy put on 56 cents, or 3.69 per cent, to $15.75
• UGL fell 48 cents, or 4.4 per cent, to $10.42

10.23am: At 10.23am (AEDT), the benchmark S&P/ASX200 index was up 37.2 points, or 0.74 per cent, at 5040.8, while the broader All Ordinaries index was up 35.3 points, or 0.70 per cent, at 5057.1.

On the ASX 24, the March share price index futures contract was up 46 points at 5024, with 9,487 contracts traded.

Stock Move Price

• AMP +0.03% to $5.36
• ANZ Bank +0.09% to $28.25
• BHPBilton +0.21% to $36.56
• CBA 0.63% to $66.10
• NAB 0.14% to $30.09
• NewsCorp +0.41% to $28.13
• Rio Tinto +0.50% to $66.07
• TelstraCp +0.015% to $4.61
• WestpacBk +0.12% to $30.35
• Woodside +0.09% to $36.43
• Woolwrths +0.25% to $34.19

10.05am: AT THE OPEN: The benchmark S&P/ASX200 index was up 16.83, or 0.34 per cent, at 5020.3 points.

9.50: Building products group James Hardie has trimmed its earnings forecast for the year, saying conditions in the housing market remain uncertain.

The group on Wednesday revealed it had made a net operating profit of $US31.5 million ($A30.95 million) in the third quarter to December 31, up from a loss of $US4.8 million ($A4.72 million) a year earlier.

The results include the company's asbestos-related costs, plus regulatory costs and tax adjustments.

Excluding those costs, operating profit rose to $US28.8 million ($A28.29 million) from $US27.7 million ($A27.21 million).

Chief executive Louis Gries said that while the US housing market had gained momentum, earnings growth had been constrained by lower sales prices and higher costs.

But, he said, if the US market continued its recovery, earnings were expected to rise.

9.45am: Engineering firm UGL's first half profit has slumped by 53 per cent due to $25 million in costs from a restructure.

UGL made a net profit of $26 million in the six months to December 31, down from $55.4 million in the previous corresponding period.

Underlying net profit, which excludes the costs of its restructure and rebranding of one of its businesses, was $51 million in the six months to December, down from $72.2 million in the previous corresponding period.

9.30am: Half an hour until market opens. In the mean time let's have a quick look at how Italy has sent the markets into a frenzy:

The Italian connection:
The Italian election sent European stocks plummeting overnight. Former Prime Minister Silvio Berlusconi almost got re-elected, sending all the austerity measures implemented by Mario Moni into doubt. Eoin Doyle wrote:

The fear is that a divided parliament in Italy would make the implementation of the austerity medicine (cutting public debt and spending) more difficult and would put a spanner in the works of the European recovery project - something that makes markets very nervous.

Italy is Europe’s third largest economy and how it performs and who is in power matters.

Read more on How Italian voters tanked global markets here.

8.50am: AGL Energy's acquisition of a major Victorian power plant has contributed to a significant rise in first half profit to $365 million.

AGL acquired Loy Yang A, Australia's third largest coal fired power station, in June 2012.

The contribution of earnings from Loy Yang helped AGL's net profit in the six months to December 31 rise from $117 million in the previous corresponding period. Read more here

8.45am: Westfield Group lifts profits
Shopping centre developer Westfield Group's annual profit has grown by 18 per cent as income from its centres across the world increased.

The group, which manages 105 shopping centres in five countries, made a $1.72 billion profit in the year to December 31, up from $1.532 billion in 2011.

Joint chief executives Peter Lowy and Steven Lowy said 2012 was a year in which the company made several changes to its property portfolio as it aims to improve its returns to shareholders.

"The performance for the year has been very good and in line with expectations," they said today.

7.00am: The Australian market looks set to open higher after a positive performance on Wall Street buoyed by upbeat earnings results and after Federal Reserve chairman Ben Bernanke said US economic growth had rebounded from the fourth quarter.

At 6.30am AEDT today, the March share price index futures contract was up 20 points at 4998.

Making news today:

Economic news
In economic news today, the Australian Bureau of Statistics is due to release construction work done, December quarter, figures.

Company news:

• Westfield Group full year results
• Sydney Airport full year results
• Prime Media Group first half results
• Slater & Gordon first half results
• Wotif.com first half results
• AGL Energy first half results
• UGL first half results
• James Hardie Industries third quarter results

At the close yesterday
In Australia, the market yesterday closed lower but pared back earlier heavy falls.

The benchmark S&P/ASX200 index closed down 52.2 points, or 1.03 per cent, at 5003.6 points, while the broader All Ordinaries index had fallen 50.9 points, or 1.0 per cent, to 5021.8 points.

Dollar
The Australian dollar is lower against a stronger greenback following improved US economic figures.

At 6.30am AEDT today, the currency was trading at 102.42 US cents, down from 102.83 US cents yesterday.

The Australian dollar weakened overnight after improved American consumer confidence and housing data lifted the US dollar.

The Conference Board's consumer confidence index hit 69.6 in the month of February, while the Commerce Department reported a 15.6 per cent increase in new home sales, the biggest increase in nearly two decades.

What happened overnight:
Europe
European stock markets have slumped as dealers assess the fallout of Italy's political impasse after elections in the indebted eurozone country.

Milan's FTSE MIB index tumbled 4.89 per cent to end the day at 16,552 points, with deadlock in Italy's parliament.

London's FTSE 100 index of leading companies fell 1.34 per cent to 6270.44 points, and Frankfurt's DAX 30 shed 2.27 per cent to 7597.11 points.

In Paris, the CAC 40 shed 2.67 per cent to 3621.92 points, as shares in European banks tumbled, while Madrid's IBEX 35 index dived 3.2 per cent to 7980.7 points on fresh fears of eurozone instability.

The price of gold, which is often seen as a haven in times of economic unrest, grew to $1590.50 an ounce from $1586.25 yesterday in New York.

US stocks open higher
US stocks have opened solidly higher in anticipation of congressional testimony by Federal Reserve Chairman Ben Bernanke.

The markets are also being buoyed by upbeat earnings results, including figures from home-improvement retailer Home Depot.

Fifteen minutes into trade, the Dow Jones Industrial Average was up 83.01 points (0.60 per cent) to 13,867.18.

The broad-based S&P 500 jumped 7.45 points (0.50 per cent) to 1495.30, while the tech-rich Nasdaq Composite Index rose 7.28 points (0.23 per cent) to 3123.53.

The gains partially offset deep losses sustained yesterday in the wake of the uncertain outcome of the Italian elections.

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How Italian voters sent markets plunging

Former Italian Prime Minister Silvio Berlusconi almost got re-elected sending markets into a frenzy. Picture: File Source: AFP

THE Italian election sent European stocks plummeting overnight. Former Prime Minister Silvio Berlusconi almost got re-elected, sending all the austerity measures implemented by Mario Moni into doubt.

A shock election result on Monday showed a surge in support for comedian Beppe Grillo’s anti-establishment campaign, as well as surprising support for former Prime Minister Silvio Berlusconi.

It is an indication of just how interconnected global markets are that the outcome of an election in a southern European country on the other side of the world could send shockwaves through to our local market.

European stockmarkets slumped overnight: Milan's FTSE MIB index tumbled 4.89 per cent and London's FTSE 100 index of leading companies fell 1.34 per cent.

Yesterday our own local market dived 1.2 per cent in early trade as a direct knock on from the Italian stalemate.

The reason: the Italian connection
Investors are concerned that the Italian people have voted in large numbers for a political party which is anti-austerity and anti-euro.

They were hoping for the liberal leader Pier Luigi Bersani to win which would allow him to form a coalition government with pro-austerity and current leader Mario Monti.

Instead the Italian people have staged somewhat of a "rebellion" and a push back against austerity.

The rebellion means a huge share of the vote has gone to Mr Berlusconi and Beppe Grillo, the populist comedian.

Although Mr Berlusconi’s party does not have enough to form a majority Government – it has sent the markets into a frenzy because of fear of contagion.

It puts doubts in investors’ minds about the Eurozone’s ability to emerge from its sovereign debt crisis and see through its austerity program in problem countries like Spain, Italy and Greece

The fear is that a divided parliament in Italy would make the implementation of the austerity medicine (cutting public debt and spending) more difficult and would put a spanner in the works of the European recovery project - something that makes markets very nervous.

Italy is Europe’s fourth largest economy and how it performs and who is in power matters.

It also suffers from a raft of economic problems common to other southern European countries, ranging from low growth to an inflexible labour market and high debt to GDP - making strong leadership a must if it is to face up to its debt issues, implement the necessary austerity measures and start to regain its competitiveness.

We should also bear in mind that markets around the world are coming down off recent record highs, driven up as some see it by governments pumping money into the system and over-excited investors inflating prices of late.

So it is not surprising that we see a strong pull back on uncertainty out of Europe. 

On the other hand it can be argued we are seeing a return in investor confidence and appetite.

However ongoing doubts over a Euro area recovery, unresolved fiscal cliff issues in the US, questions over growth in Japan and China mean markets will likely remain choppy for some time to come.
 

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