Dow up 40 pts, Passage Of Healthcare Bill Eases Growth Concerns

March 23rd, 2010  by Katy Loi

Closing Data

	Current	Change	%
Dow Jones	10,785.89	43.91	0.4%
NASDAQ	2,395.40	20.99	0.9%
S P 500	1,165.81	5.91	0.5%
FTSE 100	5,644.54	-5.59	-0.1%
Nikkei 225	10,824.72	80.69	0.8%
ASX 200	4,872.20	42	0.9%
COMEX Gold - Dec 09	1,101.30	-6.3	-0.6%
COMEX Silver - Sep 09	16.935	-0.097	-0.6%
COMEX Copper - Sep 09	337.5	0.25	0.1%
WTI Spot	81.76	0.86	1.1%
AUD-USD	0.9181	0.0023	0.3%
Aluminium	2,233.00	-9.5	-0.4%
Copper	7,461.00	-27	-0.4%
Lead	2,210.50	-34.5	-1.5%
Nickel	22,700.00	575	2.6%
Tin	17,675.00	120	0.7%
Zinc	2,287.50	-28.5	-1.2%

Our market is set to open firmer today after the Dow was up 43 points overnight on the back of strength in drug and technology stocks.  The passage of the most significant US health care legislation in four decades reduced uncertainty surrounding the prospects for pharmaceutical and health-insurance companies under President Barack Obama’s biggest policy initiative. 

This seems to have overcome concerns on higher interest rates in India and IMF’s prediction that government debt can stifle growth in developed economies. After months of debate, the House of Representatives approved a healthcare reform bill that will extend coverage to 32 million more Americans. President Obama is expected to sign the bill into law and it is forecast to cost $940 billion over 10 years.  Some concerns about Greece lingered after news Germany might not go along with European Union efforts to help the country cut its debt, but they were offset by the focus on healthcare. 

Gold closed down $8.10 at $1,099.50 Monday. A stronger U.S. dollar index in early trading, as well as lower crude oil prices, helped to press gold prices lower.  The specter of rising interest rates in major world economies has spooked the gold bulls a bit, following last Friday's move by India's central bank to raise interest rates. China could be the next country to further raise its interest rates to ward off inflationary pressure.

Today we could see the market retest 4880 as it has tried to break through this level twice late last week.  A break on significant volume could see the market back up to 4950. We are trading above short and long term moving averages and have been for the entire month of March. Support at 4850 should hold for the rest of the week as this is an old resistance level from mid March’s previous trading range. We are now in our seventh week of gains if the market can hold at these levels which has been the first time since the last bull market which was two a half years ago in Oct 2007.  Also, the volatility index, a gauge of risk aversion is at 18 month lows which is a sign that investors are reasonably confident in the market whilst there may be some caution still lurking. 

In company news, RIO closed lower yesterday, as Australian executive Stern Hu pleaded guilty to receiving bribes of up to $960,000, during the opening day of the trial of four Rio Tinto executives in China. The trial continues today.  BHP fell 1.41% at $42.59 as its Hay Point coal terminal in Queensland has been damaged by cyclone Ului, resulting in the port remaining closed. The company says walkways, cabling and parts of the berthing platforms have been damaged. An assessment will be conducted today to determine the extent of repairs and the likely timeframe to recommence shipping. Hay Point has been closed since March 11 due to high seas and railings into the terminal halted on March 18. Rainfall in the area had been predicted to ease by this morning.

 

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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