'Helluva Rally' but remain cautious
March 24th, 2009 by Bryden Elssmann
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7775.86 | 497.48 | 6.8% |
| NASDAQ | 1555.77 | 98.5 | 6.8% |
| S P 500 | 822.92 | 54.38 | 7.1% |
| FTSE 100 | 3952.81 | 109.96 | 2.9% |
| Nikkei 225 | 8215.53 | 269.57 | 3.4% |
| SPI Futures | 3622 | 69 | 1.9% |
| All Ords | 3,483.00 | 78.1 | 2.3% |
| Oil | 53.05 | 1.5 | 2.9% |
| Gold | 952.5 | -3.7 | -0.4% |
| Silver | 13.875 | 0.035 | 0.3% |
| Aluminium | 1403 | -31 | -2.2% |
| Copper | 4006.5 | 95.5 | 2.4% |
| Lead | 1341 | 39 | 3.0% |
| Nickel | 9815 | -90 | -0.9% |
| Tin | 10600 | 150 | 1.4% |
| Zinc | 1255.5 | 25.5 | 2.1% |
Wall Street
U.S. stocks posted the first back-to-back weekly rallies of the year after the Federal Reserve said it will buy $US1 trillion of troubled assets and a report showed the longest streak of declining home construction in 18 years has ended. The Treasury’s plan is a public-private investment program aimed at taking bad assets from bank balance sheets. The Government will be working as a facilitator purchasing billions in toxic assets at a discounted rate and on selling these to private equity firms. The concern is whether banks will be willing to sell the assests at a discount and if there will be enough buyers.
The Dow Jones Industrial Average rose 497.48 points, or 6.84 percent, to 7775.86. The S&P 500 climbed 1.6 percent to 822.92, increasing 22 percent from 12-year low of 676.53 on March 9, technically a bull market move.
The financial sector led the rally, Bank of America and Citigroup soared at least 19 percent following the U.S. Treasury‘s announcement. The initial market reaction suggests the U.S. Treasury’s plan may be good for banks, investors and the whole index. The energy sector also posted gains as oil added 7.8 percent. Oil prices are at their highest level since December as investors bet on commodity stocks benefiting from an economic recovery. The rally capped the market’s steepest two-week gain since 1938 as investors speculated the Obama administrations plan to rid banks of toxic assests will stimulate growth. Analysts are mixed, with some calling this the start of a bull market while others are warning the Treasury’s plan is simply a rehash of what has already been mentioned and doesn’t resolve the issue of how to value bad assets. Regardless, there is a lot of cash on the sidelines, and the market is welcoming some good news…for a change.
ASX
The Australian market is set to open higher this morning continuing on from yesterday’s momentum. Higher oil prices, US$53.05, and a stronger Aussie dollar should rally the energy sector today. Stocks to watch today are Woodside Petroleum Limited (WPL), Santos Limited (STO), and Oil Search Limited (OSH). The Aussie dollar hit an 11 week high, up 1.4 percent to US70.61 following the announcement from the U.S. Treasury. Australian investors have cheered the Obama plan which is aimed at the heart of the global financial crisis. The ASX200 rose 2.4 percent to 3550.3 with the SPI up 88 points.
The market has rallied some 500 points in 11 trading days…one ‘Helluva Rally’.
Options expiry is this Thursday.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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