Inflation fears
March 20th, 2009 by Bryden Elssmann
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7400.8 | -85.78 | -1.1% |
| NASDAQ | 1483.48 | -7.74 | -0.5% |
| S P 500 | 784.04 | -10.31 | -1.3% |
| FTSE 100 | 3816.93 | 11.94 | 0.3% |
| Nikkei 225 | 7945.96 | -26.21 | -0.3% |
| SPI Futures | 3482 | -6 | -0.2% |
| All Ords | 3,417.00 | 30.6 | 0.9% |
| Oil | 51.46 | 3.34 | 6.9% |
| Gold | 958.8 | 69.7 | 7.8% |
| Silver | 13.52 | 1.585 | 13.3% |
| Aluminium | 1401 | 62 | 4.6% |
| Copper | 3930 | 190 | 5.1% |
| Lead | 1335 | 14.5 | 1.1% |
| Nickel | 10015 | 310 | 3.2% |
| Tin | 10650 | 595 | 5.9% |
| Zinc | 1222 | 30 | 2.5% |
Wall Street
US stocks retreated as financial shares fell for the first time in three days on growing skepticism the Federal Reserve’s plan to buy bonds will revive the economy. The S&P 500 dropped 1.3 percent to 784.04. The Dow Jones lost 85.78 points, or 1.2 percent, to 7400.80.
ASX
The Australian share market was capped Thursday by technical resistance at 3500, after the US Federal Reserve launched a plan to fight deflation by buying government debt. The bears couldn't claim victory as the index set a fresh four-week high and closed near that level. The benchmark S&P/ASX 200 index finished up 33.9 points or 1.0% at 3480.2, after trading in a range of 3453.0 to 3500.7, slightly higher than Wednesday's range.
At its high, the Australian share market had risen 11% in eight days, or roughly 20% in currency-adjusted terms. Some traders said recent strength was exaggerated by activity related to Thursday's index futures expiry (SPI). Yet, a few traders were increasingly bullish.
Financials tracked their U.S. peers, with Macquarie Group up 8.7% at A$24.60, Commonwealth Bank up 4.0% at A$34.00, Westpac up 2.6% at A$18.20 and QBE up 5.8% at A$19.79. Gold stocks also outperformed, with Newcrest up 5.5% at A$33.09 and Lihir up 5.5% at A$3.26 after gold spiked on inflation fears.
In resources, BHP rose 0.6% to A$31.25. Rio Tinto fell 4.2% to A$45.49 amid perceptions of increased political resistance to its deal with Chinalco.
OIL
Oil has traded above $US50 a barrel for the first time this year as investors react to the Federal Reserve’s latest economic stimulus. April delivery settled at $US51.61 a barrel, up $US3.47 or 7.2 percent. Oil last closed above $US50 on November 28,2008. After plummeting from July’s peak above $US145 a barrel, crude prices have bounced sideways for months. The Federal Reserve’s plan to buy up Treasuries and mortgage-backed securities has raised concerns about inflation and the devaluation of the US dollar, triggering a scramble for hard assets like Oil and Gold.
GOLD
Gold closed sharply higher up 8 percent closing above $US900 an ounce. The renewed rally in Gold is a clear indication the market is sceptical of the Fed’s policy concerned about the potential inflationary pressures.
Options Expiry
It is options expiry next Thursday (26th March). Because of the strong market rally, many investors will be in exercise territory. You need to examine your position and discuss it with your adviser.
Have a good Weekend.
Neil Gynther
Head of Stockbroking
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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