Of Earnings and Interest Rate
July 31st 2007 09:01
Will this time next week that we would have already forgotten about the US credit crunch induced global sell off last week? Possible, as concerns over U.S economy gradually dissipate but it is still wise to learn from the lesson so that we can have a reference for the future.
Overnight the US market recovered from the loss late last week by a significant portion. Global market indices also show the absence of reds. Worries of a bear market and economic recession gave way to interpreting last week sell off as a welcomed correction and in fact, it created affordable values in terms of price-earning multiples.
Hickey and Walters of Bespoke charted the analysts' earnings forecast of the US S&P 500 shares relative to its price index which shows that two-thirds of the shares with cheaper forward P/E ratio as of early July, 2007. And further discounts were given from last week's fall. This is after revision of analysts' forecast from the initial second quarter earnings growth rate of 4.6% to 7.5%.
Given the strong correlation between US and Australia sharemarket it is essential to understand the state of play from across the pacific and from the indicators, it seems that there would be some good times to come. Furthermore on the home front, the market is expected to buoyed by earnings report starting next week,
But will the good times be interrupted by the interest rate? Latest statistics show that credit demand has surged stronger than expected which provided more weight for the RBA to hike up the rates on 8th August.
Overnight the US market recovered from the loss late last week by a significant portion. Global market indices also show the absence of reds. Worries of a bear market and economic recession gave way to interpreting last week sell off as a welcomed correction and in fact, it created affordable values in terms of price-earning multiples.
Hickey and Walters of Bespoke charted the analysts' earnings forecast of the US S&P 500 shares relative to its price index which shows that two-thirds of the shares with cheaper forward P/E ratio as of early July, 2007. And further discounts were given from last week's fall. This is after revision of analysts' forecast from the initial second quarter earnings growth rate of 4.6% to 7.5%.
Given the strong correlation between US and Australia sharemarket it is essential to understand the state of play from across the pacific and from the indicators, it seems that there would be some good times to come. Furthermore on the home front, the market is expected to buoyed by earnings report starting next week,
But will the good times be interrupted by the interest rate? Latest statistics show that credit demand has surged stronger than expected which provided more weight for the RBA to hike up the rates on 8th August.
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