Concerns intensify
March 2nd, 2009 by Cale McCulloch
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7062.93 | -119.15 | -1.7% |
| NASDAQ | 1377.84 | -13.63 | -1.0% |
| S P 500 | 735.09 | -17.74 | -2.4% |
| FTSE 100 | 3830.09 | -85.55 | -2.2% |
| Nikkei 225 | 7568.42 | 110.49 | 1.5% |
| SPI Futures | 3247 | -69 | -2.1% |
| All Ords | 3,297.00 | -0.5 | 0.0% |
| Oil | 44.15 | 0.97 | 2.2% |
| Gold | 942.5 | -0.1 | -0.0% |
| Silver | 13.085 | 0.135 | 1.0% |
| Aluminium | 1290 | -21.5 | -1.6% |
| Copper | 3390 | -53 | -1.5% |
| Lead | 1025 | -25 | -2.4% |
| Nickel | 9675 | -430 | -4.3% |
| Tin | 11000 | 50 | 0.5% |
| Zinc | 1075.5 | -50 | -4.4% |
US markets ended the week on a negative note, closing down some 120 points on the Dow. Wall St threw everything it could at the market on Friday, starting with dismal GDP figures that came in below estimates and showed annualised growth contracted by 1.5% for the quarter. Consumer confidence results also disappointed. Add to this the corporate news which included the third attempt at bailing out Citigroup, and the prospect that AIG will need another injection from the TARP (Troubled Asset Relief Program) following the reporting of another loss in the fourth quarter. GE cut its dividend for the first time since the great depression.
Oil continued to rebound, climbing almost a dollar to close at USD 44.15 per barrel. While Gold steadied late in the session following sharp falls in previous sessions and early in Friday’s. The metal got close to technical support at USD 925 per ounce before rebounding strongly to close at USD 942.5 per ounce. Keep an eye on the gold price this week to see if the support level holds here, and the possibility of another leg up in the gold price. For those who may be interested in adding some Gold to the portfolio, now may be the time given the minor pull back in the price of the metal, which looks set to continue its climb in 2009.
Base metals were broadly lower on Friday, all closed a touch lower except for lead which closed ever so slightly higher. The stability in the metals may provide a degree of support for the local market this morning. Another factor that may bode well for the local miners is talk late last week that there has been improvement in the Chinese economy following the start of the Chinese government’s 4 trillion Yuan stimulus package. Not to mention the ongoing issue of Chinese investment in local miners which will continue to play out. In recent developments, OZ Minerals overcame the first hurdle on the way to a Chinese takeover on Friday, when it announced it had received financing extensions to the end of March which should give them enough time to try their luck with the Foreign Investment Review Board (FIRB).
On the local market this week, now that reporting season in over, all eyes will be on the RBA decision on interest rates tomorrow as well as the Retail sales also released tomorrow.
Stocks to keep an eye on include QBE insurance following results on Friday that showed profit fell just 3% year on year, but the stock was sold off due to the devil in the detail – namely the deteriorating profit margins, and the fact the reason for strong profit was largely due to one off items that impacted positively such as the FX gain from international revenues, resulting from the weaker local currency. The stock dropped 20% last week in the lead up to the result.
Those who hold Wesfarmers should look at selling aggressive call options over the stock before the placement shares begin trading on Wednesday. The obvious reason being that the retail placement of about $1.5 billion was done at $13.50 per share, representing a $4.00 per share discount to Fridays close, so we may see some heavy selling in the stock once these begin to trade.
The SPI has us opening 40 points lower this morning.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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