Rising base metals prices have pushed Australian markets higher today despite the release of more bad news on the state of the US housing market overnight.
At 12.20pm the S&P/ASX200 is up 0.5% on yesterday’s close to 5747.8, after being close to 100 points up earlier in the morning.
The US Dow Jones Index also closed up 0.78% to 12,480.30, with the possibility of the US Federal Reserve announcing a further interest rate cut when it meets tonight buoying confidence despite the release of results showing the US housing market is languishing.
More than two million people lost their houses because they couldn’t pay their mortgages in 2007, according to Realtytrac figures, a 75% increase on 2006. And new home sales dropped 4.7% in December after a 12.6% drop the previous month.
The idea that a decline in the US will have a negative effect on the global economy – a big factor behind recent market falls – gained further credence after it was reported today that Chinese Premier Wen Jiabao said 2008 would be “a most difficult year”.
“There are uncertainties in international circumstances and the economic environment, and there are new difficulties and contradictions in the domestic economy,” said Wen Jiabao, according to The Australian.
And a new International Monetary Fund report has predicted the US’s economic woes will have slowing effect on the world economy. The report says the US will grow at 1.5% in 2008 and predicts global growth will reach 4.1%, the lowest rate in five years.