A Bull In A China Shop
March 16th, 2010 by Bryden Elssmann
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,642.15 | 17.46 | 0.2% |
| NASDAQ | 2,362.21 | -5.45 | -0.2% |
| S P 500 | 1,150.51 | 0.52 | 0.0% |
| FTSE 100 | 5,593.85 | -31.8 | -0.6% |
| Nikkei 225 | 10,751.98 | 0.72 | 0.0% |
| ASX 200 | 4,784.10 | -34 | -0.7% |
| COMEX Gold - Dec 09 | 1,105.80 | 4.1 | 0.4% |
| COMEX Silver - Sep 09 | 17.108 | 0.06 | 0.4% |
| COMEX Copper - Sep 09 | 330.15 | -7.85 | -2.3% |
| WTI Spot | 80.13 | -0.64 | -0.8% |
| AUD-USD | 0.9144 | -0.003 | -0.3% |
| Aluminium | 2,216.00 | 21 | 1.0% |
| Copper | 7,470.00 | 85.5 | 1.2% |
| Lead | 2,251.00 | 10 | 0.4% |
| Nickel | 21,800.00 | 475 | 2.2% |
| Tin | 17,550.00 | 120 | 0.7% |
| Zinc | 2,330.00 | 23 | 1.0% |
Wall Street marked its fifth straight rise on the Dow, with the index up 17.46 points, or 0.16 percent to 10642.15. Commodities and other natural resources, which are traded globally in US dollar terms, were weighed down by the rally in the US currency. Gold was the exception rising $3.60 to $1105.10 an ounce. The US dollar appreciated as investors bet that the Federal Reserve may tighten, the central bank potentially increasing the cash rate. Trading on Wall Street was slow, with light volumes, as investors await the key event of the week, the results from the Federal Reserve’s latest interest rate-setting.
Retail giant Wal-Mart led the climb after Citigroup upgraded the company from a hold to a buy on predictions tha company would become more aggressive in its pricing. Wal-Mart was up 2.8% following the announcement. Competitors have to drastically reduce prices to keep their customers from heading to Wal-Mart.
RIO Tinto and Chinalco are in discussions again less than a year after the breakdown of their $21.3 billion investment deal. It is reported that RIO and the aluminium giant are in talks that could lead to the development of the Simandou iron ore field in Guinea, West Africa, at an expected cost of $13.1 billion.
Across the market we have seen a large increase in the price of iron ore however this may have already been factored into the share price of Aussie miners. Investors are becoming very bullish of resources not going down, the concern is not the stocks but the economy, namely China. Chinese Premier Wen Jiabao warned of a “double-dip” recession given the financial risks and continued high unemployment. Investors will be watching the resource hungry nation eyeing a potential increase in Chinese interest rates. China's central bank is expected to at least raise banks reserve requirement ratios as early as this week to fight inflation. This could drag Asian shares lower. China is Australia's biggest trading partner and any slowdown is growth is seen a drag on Australian sentiment.
The Australian market is potentially running out of steam having traded in a band between 4500 and 4800 unable (for now) to break through the 5000 level. The market is looking for a significant catalyst to break the range in the next few months.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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