Dow firmer on services and jobs data
August 5th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,680.43 | 44.05 | 0.4% |
| NASDAQ | 2,303.57 | 20.05 | 0.9% |
| S P 500 | 1,127.24 | 6.78 | 0.6% |
| FTSE 100 | 5,386.16 | -10.32 | -0.2% |
| Nikkei 225 | 9,489.34 | -204.67 | -2.1% |
| ASX 200 | 4,542.08 | -28.0195 | -0.6% |
| COMEX Gold - Dec 09 | 1195.9 | 8.4 | 0.7% |
| COMEX Silver - Sep 09 | 18.278 | -0.144 | -0.8% |
| COMEX Copper - Sep 09 | 340.45 | 4.6 | 1.4% |
| WTI Spot | 82.5 | -0.05 | -0.1% |
| AUD-USD | 0.9168 | 0.0001 | 0.0% |
| Aluminium | 2,201.00 | 1 | 0.0% |
| Copper | 7,370.50 | 10.5 | 0.1% |
| Lead | 2,183.00 | 7.5 | 0.3% |
| Nickel | 21,520.00 | 15 | 0.1% |
| Tin | 19,875.00 | 100 | 0.5% |
| Zinc | 2,073.50 | 14 | 0.7% |
The Dow closed up 44 points on the back of better than expected growth in American service industries. Reports show companies added 42,000 workers last month which will help positive speculation before unemployment data out in the US tonight. The Institute for Supply Managements gauge of service industries which increased to 54.3 which was better than expected. It is interesting to see the S&P500 flirting with the key technical level of 1128 (the 200 day moving average) as it closed at 1,127.24 at 4 p.m. in New York which is the highest closing price since May 17. We will need to see the market not only break but hold above this level for a few trading sessions to show some conviction in the last rally. What dampened the rally last night was ongoing concern that news that Chinas economy may cool due to a real-estate slump. Banking regulators told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60 percent in the hardest-hit markets, Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively.
Gold prices last night pushed above the key psychological and technical level of $1,200.00 an ounce, but could not hold above that level. A report that may have boosted buying interest in gold was that the U.S. Federal Reserve may embark on a policy of buying more U.S. government securities to monetize U.S. debt. This quantitative easing of monetary policy could be inflationary and many believe it would reduce the value of the U.S. dollar. Also, the Peoples Bank of China said it will increase the scope of its banking sector that is allowed to deal in gold beyond the present five largest commercial banks that are allowed to deal in gold. That news was also bullish for the gold market as it means China will tolerate more gold trading within its borders, which should increase demand of gold in China.
Today we are pointing to open 22 points higher as the market tries to push through 4594 resistance (100 day moving average). If we can break through this level, the next target would be 4636, the June 21 high. Data to watch out for tonight is initial jobless claims in the US and earnings report for RIO to come out today. The market is now trading on an uptrend channel which has held since the beginning of July. Trend line support sits at 4540 followed by 4478 which is the 20 day moving average. Risk seems to be returning to the market as reporting season kicks off, a sign being the dollar index breaking below its 200 day moving average as investors are seeking returns whilst the VIX (volatility index or fear gauge) remains low.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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