Market consolidates after a stellar September
September 30th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,835.28 | -22.86 | -0.2% |
| NASDAQ | 2,376.56 | -3.03 | -0.1% |
| S P 500 | 1,144.73 | -2.97 | -0.3% |
| FTSE 100 | 5,569.27 | -9.17 | -0.2% |
| Nikkei 225 | 9,559.38 | 63.62 | 0.7% |
| ASX 200 | 4,643.60 | -1.4 | -0.0% |
| COMEX Gold - Dec 09 | 1310.3 | 2 | 0.2% |
| COMEX Silver - Sep 09 | 21.952 | 0.245 | 1.1% |
| COMEX Copper - Sep 09 | 366.15 | 2.45 | 0.7% |
| WTI Spot | 77.86 | 1.68 | 2.2% |
| AUD-USD | 0.9696 | 0.0017 | 0.2% |
| Aluminium | 2,293.50 | 68.5 | 3.1% |
| Copper | 8,016.50 | 150.5 | 1.9% |
| Lead | 2,272.50 | 49.5 | 2.2% |
| Nickel | 23,200.00 | 390 | 1.7% |
| Tin | 24,355.00 | 745 | 3.2% |
| Zinc | 2,187.00 | 41.5 | 1.9% |
The Dow was pushed slightly lower overnight by worries that Europe’s most indebted counties will have difficulties funding budget deficits. Irish banks are forced to accept inter-governmental support measures and as the PIIGS are now likely to see several of their credit ratings cut yet again. Adding to concerns was news that profit outlook for banks and retailers may be worse than expected. JPMorgan Chase & Co. and Wells Fargo & Co. declined more than 1.1 percent.
Oil was up strongly making a seven-week high due to falling supplies of gasoline and distillate fuel which may support our energy stocks. Gold made an all time high of $1,314.80 an ounce. There are talks of the Gold being ‘hyper’ overbought as the divergence is now seen between NCM’s share price and gold where gold makes new highs while NCM fails to do so. The U.S. dollar index hit another fresh eight-month low Wednesday, following a weaker-than-expected U.S. consumer confidence report and talks that the Federal Reserve will initiate another round of quantitative easing of monetary policy. As the dollar index remains very weak, the Chinese are hurting as they have a massive exposure to the dollar and the bond market. China has made it clear that it is moving to allow the Renminbi to strengthen. Our Australian dollar seems to be holding well and should continue to do so as the RBA is expected to increase rates sooner rather than later. Chinese industrialization and the floating of the yuan has also supported its performance. Positive comments from the RBA suggests that growth is increasing consistently as it is expected that capital expenditure will increase in the next 12 months.
Today is the last trading day of the month of September and the last trading day of the quarter. That could bring in some profit-taking in markets. Australia is entering a very strong business investment cycle. Having exposure to resource stocks will provide leverage to China and India’s growth and higher commodity prices. Adding contracting and construction sectors such as Leighton’s Holdings (LEI) in your portfolio will offer upside gain in higher capital expenditure which is expected to boost up mining investment by 50% in the next 12 months. Alcoa Inc., the biggest US aluminum producer, will become the first Dow company to report third-quarter results on Oct. 7 next week. This may provide an indication to our domestic Alumina’s (AWC) outlook. Alcoa expects market conditions for aluminum products, particularly automotive and commercial transportation, to improve and project an increase in the consumption of primary aluminum, particularly in
China. In the long-term, prospects for aluminum remain strong as changing trends like demographics, urbanization, and environment, will continue to support and drive aluminum consumption in the future.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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