Dow Down 120pts, Positive On Chinese GDP Out Today
January 21st, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,603.15 | -122.28 | -1.1% |
| NASDAQ | 2,291.25 | -29.15 | -1.3% |
| S P 500 | 1,138.04 | -12.19 | -1.1% |
| FTSE 100 | 5,420.80 | -92.34 | -1.7% |
| Nikkei 225 | 10,737.52 | -27.38 | -0.3% |
| ASX 200 | 4,868.00 | 7 | 0.1% |
| COMEX Gold - Dec 09 | 1,112.60 | -27.4 | -2.4% |
| COMEX Silver - Sep 09 | 17.88 | -0.92 | -4.9% |
| COMEX Copper - Sep 09 | 335.5 | -9.2 | -2.7% |
| WTI Spot | 77.4 | -1.62 | -2.1% |
| AUD-USD | 0.9102 | -0.013 | -1.4% |
| Aluminium | 2,243.50 | -49 | -2.1% |
| Copper | 7,442.00 | -65 | -0.9% |
| Lead | 2,420.50 | -31 | -1.3% |
| Nickel | 18,645.00 | 10 | 0.1% |
| Tin | 17,630.00 | -300 | -1.7% |
| Zinc | 2,458.50 | -8.5 | -0.3% |
The Dow was down around 120 points overnight on concern that Chinas move to curb lending will slow the global economic recovery. There was also continued disappointing earnings from the US financial sector. Gold slid 28 dollars to $1111 an ounce, oil is down $1.62 to $77.70 and the US dollar gained as much as 1.2% against a basket of six major currencies. Chinas approach in raising the reserve ratios of the Banks should be seen as a way of creating sustainable growth rather than a negative on sentiment. Chinese GDP is out today around midday which may trigger our market, particularly resources stocks BHP and RIO, to rally should this be positive. Economists expect that China’s GDP rose by 10.5% in the fourth quarter of calendar 2009.
As the ASX demands stricter company rules, as merger and acquisition and other corporate activity rise this year, this is an excellent indicator that markets are going to trend higher. Market participants are snapping up stocks that look cheap and vulnerable to a takeover. This provides a floor for the market. Many firms can now leverage their balance sheets to make acquisitions. Cashed up buyers may chase deals offshore and foreign owners of Australian assets might look to take advantage of the currency's strength to take profits on the sale of assets in Australia. We may see further commodity upgrades as the USD continues to be weak and Chinese data such as PMI (purchasing managers index) continues to be positive, should this be the case there is potential for 10% on the upside of resources as the market buys into the next rally.
Our market is pointing to open down 38 point according to the futures. The morning may see the market test 4800 before a retracement up to 4830 into the trading range the we have been in over the last week. A positive outcome from Chinese GDP could see a surge up to 4848/4860 level. Domestic data out today is new motor vehicle sales (MoM) for December.
In company news, WBC is giving select customers a sweetened 0.20 of a percentage point cut on their mortgage.
BHP has reported a jump in December quarterly production volumes with records achieved for the half year. The company says half year production records were set for petroleum and iron ore, nickel and zinc also achieving record results. Iron ore output jumped 11% to 32.449 million tonnes in the December quarter taking half year production to 62.2 million tonnes.
The Australian Competition and Consumer Commission has begun its review of NAB bid for AXA Asia Pacific Holdings Ltd. According to the watchdog’s website the ACCC aims to release its findings into the proposed acquisition on March 18.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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