AM 1150 Kelowna - Radio Rallies & Reversals

So yesterday was a big day for global equity markets and in particular North American equity markets, with the TSX composite, S&P 500 and DOW, all closing up 2% or better. Of note, the S&P 500 and DOW closed above their respective 200 day moving average, which perhaps indicates a minor base and potential reversal of the downward trend this past month. All this was somewhat surprising as their was really no news, and the news we did get was on the disappointing side of the fence.

Global economic news released earlier this morning again was somewhat disappointing, including lower than expected housing starts in the US. As a result North American futures pointed to a lower opening and that's exactly what we got.

Turning to the Euro zone, Spain looks to be the next shoe to drop in the continuing soverign debt saga. Spanish banks are borrowing record amounts from the ECB and the country's financial institutions are being shut out of international capital markets. Spain is a more integral part of the EU and a breakdown of the Spanish financial system could cause a worse crisis than Greece did.

GB