On what analysts described as a “Great Day for the Euro,” Charles Schwab announced the launch of a new platform that allows clients to trade equities directly online in 12 of the world’s most liquid foreign markets: Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, Italy, Japan, Netherlands, Norway and the United Kingdom.
Investors will have the ability to buy, sell and hold equities in local currencies, allowing them to hedge their exposure to the U.S. dollar and to measure how a specific foreign stock is performing without having to take the impact of a fluctuating exchange rate into account.
Schwab’s announcement came as financial markets finally rallied in relief after Germany's top court rejected calls to block the permanent eurozone bailout fund. “It’s a great day for the Euro,” Tatjana Michel, director, currency analysis, Schwab Center for Financial Research, said at a press event on Wednesday.
“The cost of breaking up the Euro would have been much higher than saving it,” Michel noted.
Analysts suggested that together with European Central Bank’s plans to buy the government bonds of struggling countries, Europe now has the tools it needed to emerge from its protracted financial crisis.
With there seemingly being light at the end of the Euro tunnel, Liz Ann Sonders, chief investment strategist, Schwab Center for Financial Research, underlined how truly interconnected global markets are.
“The financial crisis didn’t just start in the U.S and spread,” she said, noting that the American economy is nevertheless further ahead in its recovery than other markets.
Schwab’s Michel reported that U.S. investors are increasingly looking beyond national borders to diversify their investment portfolios.
Michelle Gibley, director of international research, Schwab Center for Financial Research, indicated that emerging markets in particular continue to offer plenty of opportunities for investment.
“Emerging markets have a lot of factors to support growth. They have very young populations that can produce a lot of output, and fewer older people to support,” she noted.
Gibley also pointed out that although emerging markets do have some political risk, they also have natural resources and lower debt than established markets relative to both their governments and population.
She indicated that Australia and Canada also continue to offer lots of investment potential. Their upside includes natural resources and both being among the last few countries to be triple-rated, she said.
Gibley also noted that the financial sector in Australia has recently shown particularly strong signs of health.