Lower Economic Growth Forecasts by Fed Weighs Dow's 6 Day Winning Streak
July 15th, 2010 by Katy Loi
Closing Data
| 9685.67 | -109.57 | % | |
|---|---|---|---|
| TOPIX | 858.52 | -12.21 | -1.4% |
| Hang Seng | 20560.8 | 129.75 | 0.6% |
| S P ASX 200 | 4437.9 | -24.5 | -0.6% |
| Shanghai | 2470.2 | -0.24 | -0.0% |
| Dow | 10366.7 | 3.7 | 0.0% |
| Nasdaq | 2249.84 | 7.81 | 0.4% |
| S P 500 | 1095.17 | -0.17 | -0.0% |
| S P TSX | 11620.2 | -52.68 | -0.5% |
| Mexico Bolsa | 32305.7 | 120.51 | 0.4% |
| Brazil Bovespa | 63479.5 | -206.1 | -0.3% |
The Dow closed up 3 points over night as the Federal reserve minutes revealed lower forecasts for economic growth to a range of 3-3.5% versus 3.2-3.7% in April. Inflation outlook was also reduced to a range of 1-1.1% from 1.2-1.5% in April. Consumer borrowing fell $9.1 billion in May following a $14.9 billion decrease in April whilst the non- government sector added less jobs in June than forecast by economists. Despite continuing concerns on high unemployment, Reserve officials stated economic stimulus was not required. This reinforces the Fed’s pledge last month to keep the benchmark lending rate at around zero for an extended period due to constrained spending and contracted credit.
The price of gold closed weaker as the market continues to consolidate around the $1,200.00-an-ounce level. Prices have been trading in a sideways fashion for two weeks with resistance at $1230.00 and support at $1185.00. The European Union's sovereign debt crisis is on the back burner for traders and investors at present, as no fresh, unexpected news has occurred for a while. EU bond auctions this week have been well received which shows confidence increasing. Investors are awaiting the EU stress test results on its financial institutions which are due out on July 23. However, it's not known how much of the test results will be revealed on that date.
Today our market will open fairly flat after a strong session yesterday. After 8 straight days of gains on the market, the last few trading sessions have showed consolidation building for the next move. On a daily chart, the index has now crossed above medium term moving averages which confirms the uptrend from the July 6 lows. There is medium term support at 4362 and resistance at 4456. It was interesting yesterday that we had just respected the 61.8% Fibonacci retracement level at 4456 and pulled back from it. Should we break this level with some significant volume, the next move could see it back up to 4610 at the 100 day moving average. Volume is likely to pick up today and tomorrow as we are expecting the US Financials to report. Tonight we have JPMorgan and Google and on Friday night we have the big ones, Bank of America, Citigroup and GE. Data out today is Australian New motor vehicle sales for June and Consumer Inflation expectations as well as Bank of
Japan’s Interest Rate decision which is expected to be unchanged.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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