Price performances for the year suggest investors remain
cautious and somewhat wary of riskier assets even as a global
recovery appears to slowly gather steam.
The MSCI index of Asian shares outside Japan is down 0.7
percent so far this year. Likewise, the Australian dollar
<AUD=>, an investor favourite among riskier, higher-yielding
currencies, currencies, is up just 1.3 percent.
In contrast, safe-haven assets such as the yen <JPY=> and
gold <XAU=> are up 3.1 percent, and 2.5 percent respectively.
Yet for the rest of 2010, Bank of America-Merrill Lynch
argues the risk is for equity prices to be surprisingly strong.
Noting that Tuesday is the one-year anniversary of the S&P
500's 13-year closing low, and that the index has rallied
almost 70 percent since, the bank argued that history shows
stock prices continue to climb in the second year after a bear
market.
"Only once was 'year two' a year of negative return," it
said, referring to the early 1930s bear market. It said the
average gain in the first year of recovery is 46 percent,
followed by 9 percent in the second year.
The pull-back on Tuesday benefitted the U.S. dollar and
yen, which are favoured as "safer" investments in the currency
market.
The U.S. dollar index <.DXY> edged up to 80.500, with
resistance lurking around its February high of 81.34. The yen
was firm against the U.S. dollar at 90.02.
The euro <EUR=>, still plagued by concerns about Greece's
fiscal crisis, drifted lower to $1.3616.
Greek Prime Minister George Papandreou tried again on
Monday to contain the crisis and shore up support for Greece.
He urged the Group of 20 nations to go after market
speculators, who he blamed for raising Greece's borrowing costs
by betting the country may default on its debts.
[ID:nN08177822]
(Additional reporting by Elaine Lies)
(Editing by Kim Coghill)