Asian markets may follow US markets to recovery today

<p>Asian stocks are expected to open higher today, particularly in Australia which experienced a brutal sell-off in equities yesterday. The S&P/ASX200 is expected to open […]</p>

Asian stocks are expected to open higher today, particularly in Australia which experienced a brutal sell-off in equities yesterday. The S&P/ASX200 is expected to open higher than the 41 points implied by the futures contracts when they resume trading shortly. 

Overnight, US markets finished higher on news that China may invest in Italy by purchasing its bonds. The news was enough to see declines turn to gains, in a very short period of time. 

The Dow Jones Industrial average firmed more than 200 points in its last 45 minutes of trading. Nine out of 10 groups in the S&P500 index rallied, led by technology and financial shares which have been savaged during this downturn. 

Markets still remain very volatile and we don’t expect that to change anytime soon. It seems that a spiral of bad news, whenever it eventuates, is offset by an announcement which sees reversals. The U.S. has shown it is willing and able, although at a high cost, to fund growth but through monetary and now fiscal policy to ensure the economy doesn’t fall into another recession. Europe has its issues, but this is nothing new and will take perhaps a generation to fix, if ever. Asian growth economies, Australia included, will fluctuate with sentiment but their long term fundamentals remain unchanged. Buying opportunities are becoming hard to dismiss, even if the market doesn’t improve in terms of pricing for a while. 

 

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