Dow down on downbeat FOMC assessment of US economy
August 12th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,378.83 | -265.42 | -2.5% |
| NASDAQ | 2,208.63 | -68.54 | -3.0% |
| S P 500 | 1,089.47 | -31.59 | -2.8% |
| FTSE 100 | 5,245.21 | -131.2 | -2.4% |
| Nikkei 225 | 9,292.85 | -258.2 | -2.7% |
| ASX 200 | 4,455.50 | -85.2 | -1.9% |
| COMEX Gold - Dec 09 | 1199.2 | 1.2 | 0.1% |
| COMEX Silver - Sep 09 | 17.902 | -0.256 | -1.4% |
| COMEX Copper - Sep 09 | 325.4 | -5.85 | -1.8% |
| WTI Spot | 78.02 | -2.23 | -2.8% |
| AUD-USD | 0.8964 | -0.0006 | -0.1% |
| Aluminium | 2,151.00 | 6 | 0.3% |
| Copper | 7,204.00 | -21 | -0.3% |
| Lead | 2,047.00 | -53.5 | -2.5% |
| Nickel | 21,775.00 | -280 | -1.3% |
| Tin | 20,345.00 | -260 | -1.3% |
| Zinc | 2,023.00 | -36.5 | -1.8% |
The Dow closed down 265 points, the largest move in three weeks as equities retreated across the globe. Tuesday afternoon the U.S. Federal Reserves FOMC reported the U.S. economy is growing more slowly than the Fed had expected. That news and fresh economic data from China this week, which suggests the Chinese economy is slowing, cast bearishness over the world stock markets Wednesday. Investor risk appetite is again shrinking, which has so far been more bullish for the U.S. dollar and U.S. Treasury securities than for gold. China announced that industrial output rose the least in 11 months. Joblessness will be slow to fall, signaling it will take years for the economy to recover the 8 million jobs lost during the recession. Survey results show that unemployment will average 9.6 percent in 2010 and 9.1 percent next year.
The Volatility Index was up 14 % closing at 25.39 and is likely to continue to rise as historically, the highest volatility months of the year are September and October. Also adding to the sell off was disappointing earnings results from Cisco Systems Inc., the largest maker of networking equipment, which closed down 7.9 %. The price of gold closed only modestly higher as some safe-haven buying interest has resurfaced. However, a strong rebound in the U.S. dollar index Wednesday kept a lid on golds upside potential. Gold market prices continue to trade not far from the technically and psychologically important $1,200.00-an-ounce level. Crude oil futures prices were sharply lower Wednesday, which also limited buying interest in the precious metals.
Futures markets indicate our index will open down around 100 points with our market falling for the third consecutive session. We had failed to break the June 21 high and should the market sell off continue, support may be found at 4360 followed by 4200 which is the low tested in both late May and early July. Data to watch out for today around midday is the Australian unemployment rate which is expected to be unchanged at 5.1% and also consumer inflation expectation for August. Also to look out for, earnings reports out today are for Aquarius Platinum, Coca Cola Amatil, Qantas, Telsta, and James Hardie.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
Disclaimer
The material in “Market Fox” (newsletter) is of a general nature only and neither purports nor is intended to be regarded as advice. No consideration has been given or will be given to your investment objectives, financial situation or needs. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk. Not all risks can be or will be explained in the newsletter. Previous results are no indication of future results. Actual results achieved in the market can vary considerably. The Directors and Representatives of Freeman Fox Ltd and their associates may hold securities in the companies presented.
The research made available in this newsletter is for your private use only and it is protected by applicable copyright laws and other applicable intellectual property right laws. You may not reproduce, distribute, disseminate, broadcast, sell, publish, circulate or give for free, any of the materials made available to you in this newsletter without first seeking the prior written consent of Freeman Fox Ltd.
Freeman Fox Ltd is not required to update any of the content made available in this newsletter, including but not limited to any research commentary, forecasts, recommendations or other analysis in this newsletter. Therefore, for the avoidance of any doubt, material made available in this newsletter may not be accurate after the date of publication or the date on which it is displayed in the newsletter.
To the extent permitted by law, Freeman Fox Ltd and their respective directors, officers, employees, contractors and agents disclaim all responsibility to you for any loss, liability, claim, expense (including but not limited to legal costs and resultant defence or settlement costs) or damage whatsoever, whether direct, consequential, special, incidental, punitive or indirect (including but not limited to loss of profits, trading losses and damages that result from delay, loss or inconvenience) arising out of or in connection with the content of the newsletter and/or any omissions from the content whether in contract, tort (including negligence), statute or otherwise and even if Freeman Fox Ltd has been advised of the possibility of such damage or loss.
If you require assistance in relation to your personal investment situation, contact an authorised representative of Freeman Fox Ltd.