Dow Down As European Debt Concerns Continue
May 6th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,866.83 | -59.94 | -0.5% |
| NASDAQ | 2,402.29 | -21.96 | -0.9% |
| S P 500 | 1,165.87 | -7.73 | -0.7% |
| FTSE 100 | 5,341.93 | -69.18 | -1.3% |
| Nikkei 225 | 11,057.40 | 132.61 | 1.2% |
| ASX 200 | 4,674.00 | -63.1 | -1.3% |
| COMEX Gold - Dec 09 | 1,175.00 | 5.8 | 0.5% |
| COMEX Silver - Sep 09 | 17.455 | -0.387 | -2.2% |
| COMEX Copper - Sep 09 | 315.5 | -2.35 | -0.7% |
| WTI Spot | 79.58 | -2.49 | -3.0% |
| AUD-USD | 0.9062 | -0.003 | -0.3% |
| Aluminium | 2,164.00 | -20 | -0.9% |
| Copper | 7,175.50 | -189.5 | -2.6% |
| Lead | 2,129.50 | -46.5 | -2.1% |
| Nickel | 25,650.00 | -160 | -0.6% |
| Tin | 18,080.00 | -15 | -0.1% |
| Zinc | 2,180.00 | -76 | -3.4% |
The Dow closed down 60 points overnight as concerns about Europe needing to restructure debt outweighed growth in U.S. jobs and service industries. The Standard & Poor’s 500 Index fell 0.7 percent, the lowest since March. Nickel slid 11 percent and oil fell below $80 a barrel on concerns that the debt crisis will slow global growth. Also dragging the market lower is news that Portugal may have its credit rating reduced as it tries to reduce its deficit and reinstate economic growth.
This is a signal that the Greek crisis is spreading. Moody’s believes that increased risk discrimination in the financial markets may raise Portugal’s financing costs for some time to come. The primary concern is the contagion risk associated with Greece and some of the other problematic nations in Europe and the follow-on effects on long-term economic growth. Gold closed higher at $1175.00 as buyers do some bargain hunting and buy on the dips. Gold has been holding up strongly as the US dollar index is stronger and oil price is lower. The U.S. dollar index made a 12-month high and the Euro made a 12-month low due to the European Union's debt crisis It seems that many holders of European currencies are buying gold with those currencies as a hedge against further currency weakness.
We have now tested the 4616 support level three times over the last two trading sessions, showing signs that the market has come to a level that buyers who may have been sitting on the side lines or missed the rally from our February lows are comfortable to snap up stocks at these discounted levels. Indicators show that the market is oversold and bullish divergence is forming. This means that while the price is not making new highs, the momentum is building on the buy side. Over the next few trading sessions we may see the market revert to its 100 period moving average at 4735. Should the selloff continue, support is at 4500 which is the lower end of the trading band we have been in since November last year.
In company news, Westpac Banking Corporation beat forecasts to post a 30% rise in first half cash profit to almost $3 billion. Positive news for the market is that approvals to build new homes in March soared to the highest level in almost eight years, according to the Australian Bureau of Statistics. Building approvals increased by 15.3% last month, following a revised 2.7% fall in February.
We saw some encouragement in comments by Prime Minister Kevin Rudd over a proposed new mining tax. Kevin Rudd indicated to the mining leaders that he could negotiate. A good sign is that despite the market being down yesterday, the miners who were hit the hardest, BHP, RIO and FMG all finished in the black yesterday.
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.