Confidence in banks falls, VIX rebounds
April 21st, 2009 by Bryden Elssmann
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7841.73 | -289.6 | -3.6% |
| NASDAQ | 1608.21 | -64.86 | -3.9% |
| S P 500 | 832.39 | -37.21 | -4.3% |
| FTSE 100 | 3990.86 | -101.94 | -2.5% |
| Nikkei 225 | 8924.75 | 17.17 | 0.2% |
| SPI Futures | 3681 | -84 | -2.2% |
| All Ords | 3,723.00 | -5.5 | -0.1% |
| Oil | 45.82 | -4.54 | -9.0% |
| Gold | 887.5 | 19.6 | 2.3% |
| Silver | 12.105 | 0.315 | 2.7% |
| Aluminium | 1419 | -22 | -1.5% |
| Copper | 4636 | -89 | -1.9% |
| Lead | 1509 | -16 | -1.0% |
| Nickel | 12230 | -200 | -1.6% |
| Tin | 12400 | 200 | 1.6% |
| Zinc | 1473 | -29 | -1.9% |
The Dow lost 290 points, or 3.6%, to 7841.73 while the S&P 500 slid 4.3% to 832.39. The VIX jumped 15% to 39.18 as profit taking and disappointing corporate earnings saw fear injected back into the market. Worries about financial sector earnings, despite Bank of America’s better-than-expected quarterly results, have seen the Dow post its biggest decline in 7 weeks. Bank of America slid 24% despite announcing its net income had more than tripled. The banking sector has rallied over the last month even while fundamental questions linger over the industry.
Oil also fell in line with equity markets, plunging 8.8% on concerns the US economy was not stabilising. Oil is now trading at $US45.88 a barrel with US inventory levels at their highest since 1990. Buying has shifted out of commodities and over to “safe haven” investments such as gold and the dollar, which are seen as being able to retain their value in a downturn. Gold rose sharply, up $US19.60 an ounce to $US887.50, driven by the selloff in equities.
The Australian market is expected to open weaker this morning. The SPI is currently trading down 71 points to 3694.
We have been advising clients not to reinvest in the Financials until a bout of profit taking has occurred. We believed the market had rallied too far, too fast. The overnight fall in markets may be the beginning of the consolidation phase that our market needs before it has its next rally towards 4000 points. Resources are still very good buying but we remain cautious with the Financials.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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