Wednesday, February 27, 2008

Stocks Continue Their Journey Up The Hill

Taking strong closing cues from Dow Jones, which closed substantially higher after opening weak due to outcome of weak economic data, Asian stocks ended the day higher, leading the charge was Hong Kong stocks ending on a very strong note. European markets, however, are trading lower due to profit booking as they have been gaining for the past few days. Commodities continue their very strong bull run, Equity investors too have been participating strongly in commodity trading after burning their jands very badly in recent crash. The high commodity prices surely are making life difficult for central banks as inflation makes their policy making process very tight handed, on one hand they have deal with weakning economic growth and on the other hand they have to maintain low inflation, it can't go simultaneously as to simulate economy they have to cut interest rates and that pushes up inflation. It's like walking on a double edged sword. The smart money that got out early from stock markets in the month of December 2007, and gone into Bonds and a large part remained in cash, is indeed finding present stock valuations very attractive from long term perspective and hence utilising every fall as an buying oppurtunity. This is lending support to stocks and is very much desired.