Fresh concerns drive market lower
February 5th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,002.18 | -268.37 | -2.6% |
| NASDAQ | 2,125.43 | -65.48 | -3.0% |
| S P 500 | 1,063.11 | -34.17 | -3.1% |
| FTSE 100 | 5,139.31 | -113.84 | -2.2% |
| Nikkei 225 | 10,355.98 | -48.35 | -0.5% |
| ASX 200 | 4,622.00 | -26.3 | -0.6% |
| COMEX Gold - Dec 09 | 1,064.00 | -48 | -4.3% |
| COMEX Silver - Sep 09 | 15.33 | -0.987 | -6.0% |
| COMEX Copper - Sep 09 | 287.55 | -9.8 | -3.3% |
| WTI Spot | 72.96 | -3.81 | -5.0% |
| AUD-USD | 0.8643 | -0.0182 | -2.1% |
| Aluminium | 2,052.00 | -34.5 | -1.7% |
| Copper | 6,571.00 | -282 | -4.1% |
| Lead | 2,005.00 | -105 | -5.0% |
| Nickel | 18,255.00 | 195 | 1.1% |
| Tin | 16,620.00 | 20 | 0.1% |
| Zinc | 2,082.50 | -82.5 | -3.8% |
The Dow sold off strongly overnight finishing down 268 points, on three months lows, on concerns of increasing jobless claims with unemployment figures out tonight in the US. Worries of growing sovereign debt in Europe potentially slowing growth also contributed to the selloff. Gold was down 47 dollars and oil down around 5% closing at $73.13 a barrel. A gauge of fear, the volatility index (VIX), was up 18% overnight as Europe closed on its lows. The issue seems to be that the market, having priced in China being a big part of the economic recovery, is now realizing that it may not be playing as significant a part as it moves to measures of more sustainable growth. Technology stocks in the US were sold off strongly, however, historically, selling happens around January or February. The only tech stock that was up was CISCO. Technology stocks may be seen as good value as business looks to upgrade technology ahead of business growth.
In company news, MQG will further expand its business in Europe as it has agreed to buy the equity trading and research operations of Sal. Oppenheim. More than 50 staff of Sal. Oppenheim will move to Macquarie after the completion of the purchase, scheduled for the second quarter of 2010. At this stage Macquarie hasn't revealed a purchase price.
RIO has given a very positive prediction for future demand for aluminium, iron ore and copper over the next 15 years. Rio’s CFO Guy Elliott has told an investment forum that strong economic growth in China and India is likely to lead to a doubling in global demand for a number of key commodities in the long-term. Elliott said that demand will be so strong that it will require a huge supply response, which is likely to elevate prices. However he admitted that short-term results were more difficult to gauge because of concerns over government stimulus packages and speculative activity linked to low interest rates.
NWS has reported a profit of US$254 million for the three months to December 31, 2009 compared with a loss of $6.4 billion in the same quarter a year ago. These results include a one-time $500 million pre-tax charge related to the settlement of litigation filed against the company’s integrated marketing services business. Chairman and CEO Rupert Murdoch says the company is emerging from the recession with renewed vigor and strength. News Corp reported total revenue of US$8.7 billion for the quarter, up 10%.
The SPI futures indicates our market will open down 115 points (2.5%). The last 4 hours of trading last night saw some consolidation at the 4500 level. On open, we may see a continuation of downward move to find support at 4450 as investors may we wary of holding positions over the weekend with unemployment figures out in the US. Buying strength may come in to bring the market back up to close above 4540 today. Positive figures in unemployment could see a sharp rebound in equities as institutions snap up stock at low levels. Our index is still holding above the November lows and should see good support at 4450. The ranging market seems to replicate the 4 month consolidation we saw from April to July 09; difference this time being is hasn’t held above the long term moving averages. Once the concerns are shaken out, the next few trading sessions will be interesting to see if we can close back above the 4700 level to sustain the long term uptrend.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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