Dow down 96 pts on concerns that Moody's may downgrade Spain
July 1st, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 9,774.02 | -96.28 | -1.0% |
| NASDAQ | 2,109.24 | -25.94 | -1.2% |
| S P 500 | 1,030.71 | -10.53 | -1.0% |
| FTSE 100 | 4,916.87 | 2.65 | 0.1% |
| Nikkei 225 | 9,382.64 | -188.03 | -2.0% |
| ASX 200 | 4,301.50 | -44.2 | -1.0% |
| COMEX Gold - Dec 09 | 1,245.90 | 3.5 | 0.3% |
| COMEX Silver - Sep 09 | 18.708 | 0.073 | 0.4% |
| COMEX Copper - Sep 09 | 295.05 | 2 | 0.7% |
| WTI Spot | 75.63 | -0.31 | -0.4% |
| AUD-USD | 0.8407 | -0.0083 | -1.0% |
| Aluminium | 1,962.50 | -33.5 | -1.7% |
| Copper | 6,585.00 | -215 | -3.2% |
| Lead | 1,741.50 | -86.5 | -4.7% |
| Nickel | 19,935.00 | -275 | -1.4% |
| Tin | 17,750.00 | -360 | -2.0% |
| Zinc | 1,759.50 | -92.5 | -5.0% |
The Dow closed down 96 points on concerns that Moody’s may downgrade Spain as worries about sovereign debt continues. The S&P fell to 1030 on the close of New York trading, below a key technical support level of 1040 which has held since the May selloff. This breaks a four-quarter winning streak that drove the benchmark index for U.S. stocks up 47 percent. It brings the S&P back to its lowest price since October 2 last year. Also weighing down the market was the ADP report which showed that US companies employed less workers in June than forecasted.
The 13,000 gain followed a revised 57,000 increase the prior month, as data from ADP Employer Services showed. On a positive note, the European Central Bank made comments that it will lend the region’s banks less money than economists had forecast. This suggests that the region’s lenders may be financially stronger. Also, the Institute for Supply Management-Chicago Inc.’s business barometer showed manufacturing is overcoming turmoil in financial markets. Gold was stronger as the overall technical posture of the gold market remains bullish. The overall world economic and financial situation suggests safe-haven buying interest in gold will not fade any time soon.
Today, our market should open 25 points to the downside. We are still trading above the May low of 4168 with the next level of support at 4086 which is an old resistance level from June 2009. We may see more volume as fund managers may be more active Thursday and Friday to open trading positions to start the new month and new quarter. Traders are awaiting Friday morning's key U.S. jobs report, which should provide for some more active trading. The market expects U.S. non-farm payrolls to have declined by around 100,000 in June. Uncertainty is still weighing around the resource super profits tax, the consensus seems to be that it will not remain in its current form. Taking advantage of this by entering our resource stocks at these levels would be prudent as protection can be gained through selling calls with volatility relatively high.
Adding gold stocks to your portfolio may help hedge against medium downside risk as gold seems to be showing strong resilience. The price of gold has held up, as it seems to be more an ‘anti-euro’ trade, than it is against the USD. By adding exposure to both gold and resources we will be able to bring in income as well as position your account for potential upside ahead of the new financial year. So keep watching the market this week for direction from the US as volumes rise.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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