Dow retreats after weaker economic growth indicated by Beige Book Survey
July 29th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,497.88 | -39.81 | -0.4% |
| NASDAQ | 2,264.56 | -23.69 | -1.0% |
| S P 500 | 1,106.13 | -7.71 | -0.7% |
| FTSE 100 | 5,319.68 | -45.99 | -0.9% |
| Nikkei 225 | 9,753.27 | 256.42 | 2.7% |
| ASX 200 | 4,529.93 | 0.0% | |
| COMEX Gold - Dec 09 | 1,160.40 | 2.4 | 0.2% |
| COMEX Silver - Sep 09 | 17.441 | -0.185 | -1.0% |
| COMEX Copper - Sep 09 | 324.55 | 3.9 | 1.2% |
| WTI Spot | 76.99 | -0.51 | -0.7% |
| AUD-USD | 0.8935 | -0.0091 | -1.0% |
| Aluminium | 2,059.00 | 14 | 0.7% |
| Copper | 7,120.00 | 28.5 | 0.4% |
| Lead | 1,968.00 | -7 | -0.4% |
| Nickel | 20,435.00 | -290 | -1.4% |
| Tin | 19,410.00 | -90 | -0.5% |
| Zinc | 1,923.50 | 16.5 | 0.9% |
The Dow closed down 40 points overnight on the back of the Federal reserve’s comments in its Beige Book business survey stating the economic growth has slowed in some areas over the last two months. Growth has been dampened largely due to commercial real estate and the expiration of tax credit for home buyers. Two of the Fed’s 12 districts reported the economy held steady whilst two others had slowed. The Fed reported improvements in service industries, an increase in tourism, an expansion of manufacturing and progress in labor markets.
The price of gold closed fairly flat overnight, as the market was in a consolidation mode following sharp losses on Tuesday. Gold touched a three-month low in early trading last night. Investor demand for gold has cooled as they are now seeking alternative assets as seen in the recent rally in global equity markets. Gold had seen strong safe-haven buying interest in the second quarter of the year, due partly to the European Union's debt crisis prompting traders to sell European currencies and buy gold. However, the Euro currency's recent strength has thwarted those trading strategies. Also, if gold breaks 1145 on the downside, this could signify more risk appetite returning to investors.
The S&P Volatility Index (VIX) and S&P500 are now hovering around important technical resistance levels as sentiment is still able to change at any time. Until we see the market trade a few days at least above these levels, above the last high made on the 21st of June and as consumer confidence is still at 5 month lows, there is lack of conviction from buyers. The S&P Volatility Index (VIX) has remained low over July closing at 23.19 and is now trading near the 200 day moving average. If we see the VIX break this level it could be the sign for the next equities rally as fear and uncertainty are dampened. Today our market looks to open 19 points lower with 4475 as support level today which is 50 points on the downside. The next technical resistance level is at 4622 which is the high made on the 21st of June. A positive sign is that we have now been trading three days above the 60 day moving average showing a reasonable degree of buying
strength. It will be interesting to see if we can break 4660 (the 200 day moving average) to confirm the move up as we have not been trading above this average since the market broke through it on the 5th of May. Data to watch out for this week is US GDP figures out tomorrow night.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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