Home / Log Out / StockTalk / Inbox / SubjectMarks / PeopleMarks / Quotes / Portfolio
SI Mail SI NavigationHomeSite Map------------------ChartsCheck EmailCustomizeFAQFREE RegistrationMarket InsightMarket ToolsMembership Sign-UpMessage CenterNetSearchNewsPeopleMarksPeopleSearchPortfolioForecast Your PortfolioQuotesReal-Time ChartsStock ScreenerStockTalkStockTalk SearchSubjectMarks
Dow 9,834.86 -53.51 -0.54% Sponsored By
Nasdaq 1,989.21 -12.72 -0.64%
S&P 1,129.98 -6.78 -0.60%
StockTalk / Hot Subjects / New Subjects / StockTalk Search
SI: StockTalk: Gold, Mining, and Natural Resources : Gold Price Monitor
Replies: 79911
View Next 10 Messages / Previous / Next
To:Bobby Yellin who wrote (122)
From: John Barendrecht Saturday, Jun 21, 1997 10:37 PM
Respond to of 79911
Europeans Ride American-Style Bull Market
By Pierre Belec
NEW YORK (Reuter) - Money keeps pouring into stocks, propelling them to record highs, and Europeans, worried that their revolutionary plan for a single currency might unravel, are joining the American-style bull market.
The Dow Jones industrial average galloped to record levels just a week after racking up six straight sessions of new highs on a near-perfect U.S. economic story.
On Friday, the index of 30-blue-chip stocks closed up 19.45 points at a new high of 7,796.51, surpassing its June 13 record close of 7,782.04, adding to this year's gain of more than 21 percent. For the week, it was up 14.47 points.
Investors are showing no letup in their appetite for stocks as $18.5 billion flowed into U.S. stock mutual funds in May, bringing the total so far this year to $92 billion, according to the Washington-based Investment Company Institute, a mutual fund trade group.
Foreign investors are also thirsty for U.S. stocks.
The Federal Reserve estimates that in the first quarter, foreigners bought U.S. stocks at twice the pace of last year, gobbling up 6.5 percent of the more than $10.1 trillion invested in the nation's stock market. The total was also the highest since 1990.
Analysts said the rush by Europeans to U.S. stocks accelerated in the second quarter on concern that the building blocks of the European Monetary Union seemed to be falling part following the surprise outcome of the elections in two key European Union member countries -- France and Britain.
French voters picked a Socialist prime minister and in Britain, the long-ruling Conservative party went down to a crushing defeat in an apparent rejection of the common currency that would rob them of their national identity and have a central European bank dictate their economic life.
Some saw the French vote differently, saying it was not against the single European currency, which will be known as the euro.
"The vote in France was a vote against continued austerity and it was a desire to see the economy grow and in getting unemployment down," said Bill Westhoff, senior vice president of global investments at IDS International, an asset management firm. "It was probably pro-growth and not anti-euro."
The experts say the changes in the euro treaty that were negotiated this past week by EU finance ministers may have once again bailed out the single-currency plan, but the potential fallout from their agreement on jobs and fiscal discipline in the 15-nation group has spawned even more uncertainties.
The feeling is that the EU has simply agreed on a watered-down treaty and papered over jobs and budget austerity worries by France and Germany -- the driving forces behind the single currency.
As the debate grows over how best to achieve European Monetary Union, the big worry is that the plan will not fly in its present form and may be delayed or even scrapped.
"Global investors have become a little more cautious about the idea that European markets such as German stocks and bonds are totally stable stores of value and they are starting to ask themselves what will happen to their investments if the European economic unification plan fails to take hold," said John Geraghty at North American Equity Services, a consulting firm.
"People are putting safety first," he said. "And, there has been a definite movement to safety and the safest market is outside of the EU in the United States."
Geraghty said Wall Street has the best performing market, with stocks continuing to barrel to new highs on low interest rates and subdued inflatiom -- a near-perfect mix for investors.
"Right now, the chances of the euro plan of being endorsed on its official 1999 timetable don't look good because of the widely different social and economic agendas among European countries," he said.
The countries have been working for the past five years to get their economies into shape prior to the 1999 introduction of the euro.
The goal is to raise the EU to a new level and boost its competition against the dollar, putting it on a par with the United States -- the world's biggest economy.
Critics say the euro plan, which would bring tough rules for controlling government finances, is being driven simply by political imperatives that have ignored the implications of the economic marriage.
"The probability is for more of the same, and more of the same will lead to delays and changes in the euro plan," Geraghty said. "The longer before they strike, the less chances that they will strike at all."
The European Union's high jobless rates, which in some countries is the highest since the end of the Second World War has thrown cold water on the euro's prospects, raising doubts about the chances that it will be introduced no later than Jan. 1, 1999.
Overseas investors are also weighing all of the scenarios for EMU and are worried that if there is monetary union, it will be toothless and weak.
"An unraveling of the euro deal would be bullish for all dollar instruments ... and it would increase the U.S. markets' safe-haven status," said Michael Metz, chief investment strategist at Oppenheimer & Co.
"The other ramification if the euro does not happen is that it could mean the end of fiscal discipline for European countries which have embarked on very stringent spending cuts in order to join the euro," he said.
"Some resurgence of fiscal stimulus to get these economies to reacccelerate would be good for worldwide growth but it could raise some concern about inflation," Metz said.
On Friday, the Nasdaq composite index closed 0.04 of a point lower at 1,447.10 but was up 24.07 for the week.
The Standard & Poor's index of 500 stocks rose 0.71 to a new high of 898.70, for a gain of 5.43 on the week. The American Stock Exchange index was off 5.03 at 623.27, down 6.83 from last Friday.
The NYSE composite index of all listed common stocks rose 0.08 to a new high of 467.84, up 2.67 for the week.
Market Data 
Markets 
AI
