Markets: 2012’s Rush Continues

For a third year in a row, world markets have had a strong start to the year, but so far 2012 is the best of the three.

Judging by Friday's performance in Europe and the US, this rebound has more legs than the previous two.

And that will translate into a very solid opening today on the Australian market, despite another solid gain in the value of the Australian dollar as well.

The question now is will this rebound be punctured by events in Europe, as the rebounds of 2010 and 2011 were?

So far there's no sign of anything disturbing the markets' recovery, not even Greece, where the stricken country is still a way away from resolving the second bailout, without which the country will default by the end of March.

A story at the weekend suggested the Greek government and opposition had formed a united front to resist any more cuts, and talks to try and conclude the bailout agreement were postponed at the weekend and resume this week. Agreement had been hoped for at the weekend.

European finance ministers cancelled a meeting due for Monday to consider the final shape of the second Greek bailout.

That news, which would have undermined markets three months ago, failed to have an impact on Friday.

Investors are jumping on the flood of much better economic news from parts of Europe, the UK, US, China and Japan which are at odds with the gloomy forecasts of early January.

In the US, fears about Europe have receded as the economic news has proven to be much better than anyone had thought.

And Friday the rising tide of optimism was give a major boost by the January jobs report from the US which showed 230,000 new jobs created and the unemployment rate falling to 8.3% (from 8.5% in December), the lowest level since February 2009.

As well, the annual revision of the jobs data for the past year or so produced stronger job gains during 2011 than previously reported.

The end result was a three and a half year high for the Dow average and an 11 year high for Nasdaq, thanks to the impact of Apple and last week, Facebook.

The Standard & Poor's 500 index closed at its highest level since July 2011.

For the NASDAQ and the S&P 500, it was the fifth-consecutive week of gains, which means 2012 hasn't seen a down week yet.

During this period, both indices are up 11.5% and 6.9%, respectively.

In fact, it has been the best five-week streak for the NASDAQ since April 2009, when the tech-skewing index jumped 16%.

On Friday the Dow added 156.82 points, or 1.2%, to 12,862.23. The Standard & Poor's 500 Index rose 19.36 points, or 1.4%, to 1,344.90.

The Nasdaq Composite Index added 45.98 points, or 1.6%, to 2,905.66.

For the week the S&P ended up 2.2%, the Dow rose 1.6% and the Nasdaq ended up 3.2%.

In the US, more than 450 stocks across all sectors hit 52-week highs, including Apple, United Parcel Service, Yum Brands and MasterCard. The number of NYSE stocks making new 52-week highs was at it highest since July.

The Australian market will open strongly today if the futures performance on Saturday morning is any guide.

The Share Price Index futures contract jumped 56 points, or about 1.5%, to 4278 points, which means a very solid gain is in store today.

That was after a weak week which was called on Friday by an 0.4% drop in the market and a fall of 0.8% for the week as a whole.

Elsewhere in Asia, the MSC Asia Pacific Index rose 1.1% to 124.32.

Asian markets gained for a seventh straight week last week, the best winning streak since 2005, according to Bloomberg.

Hong Kong jumped 1.3% for the week, but Tokyo joined Australia in the negative column and eased 0.1%.

Shanghai rose 0.5% and South Korea was up 0.4%.

In Europe, the Stoxx Europe 600 index rose 1.7% to end at 264.60.

For the week, it added 3.6%.

The London market added 2.9%, Germany, 3.9%, France, 3.3% and Italy, 1.7%.

Emerging markets (China, Russia, Brazil, India, etc) had a big week with the MSCI Emerging Markets Index adding a huge 14% in value from the close on Friday.

That's the six weekly gain in a row and the best start to a year since 2006.