End of Euro
May 17th, 2010 by Cale McCulloch
US Stocks slid lower throughout the session on Friday night on concerns over European debt. The Euro sank to an 18 month low against the greenback amid concerns for the viability of the single currency system. At the close, the Dow was lower by 162 points or 1.51%, while the S&P 500 sank 1.88% and the NASDAQ ended lower by 1.98%.
The strengthening US Dollar hurt commodities, with crude oil sliding almost 4%. Gold steadied around the USD 1230 per Troy Ounce mark, and the Base metals all fell sharply, settling lower by between 1.4% and 6.13%. The weakness in Base metals will weigh heavily on the resources sector domestically this morning, with BHP trading in New York at an AUD equivalent of 37.47 compared with 38.64 locally on Friday.
Unexpected strength in retail sales for the US, released on Friday night showing a gain of 0.4% for the month, failed to buoy sentiment, largely due to the fact that it was strength in building materials that masked further weakness in some of the core areas.
Weakness in commodities, and the flight to safety in the US dollar pushed the Australian dollar down towards 88.5c, which may offer some support to companies with large proportions of earnings in USD, such as CSL and QBE. The countries big Oil producers will suffer on the back of weakness in energy prices. Comments came from the BHP chief executive that it may rethink the Iron ore joint venture if a deal is not struck by year end. He also has ongoing concerns about the Resource Super Profits Tax. A break down in the JV would not necessarily be a bad outcome for RIO, as the global market has changed significantly since the JV was initially struck, and the company is not longer up against a wall so to speak.
The market looks like slipping about 80 points on the open, with any further movements to be dictated by movement in the Asian markets as they come on line around midday.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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