Market to open lower on Chinese growth slowing
August 2nd, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,465.94 | -1.22 | -0.0% |
| NASDAQ | 2,254.70 | 3.01 | 0.1% |
| S P 500 | 1,101.60 | 0.07 | 0.0% |
| FTSE 100 | 5,258.02 | -55.93 | -1.1% |
| Nikkei 225 | 9,537.30 | -158.72 | -1.6% |
| ASX 200 | 4,532.80 | 39.3 | 0.9% |
| COMEX Gold - Dec 09 | 1182.4 | 12.6 | 1.1% |
| COMEX Silver - Sep 09 | 18.003 | 0.386 | 2.2% |
| COMEX Copper - Sep 09 | 331.15 | 2.15 | 0.7% |
| WTI Spot | 78.95 | 0.59 | 0.8% |
| AUD-USD | 0.9053 | 0.0047 | 0.5% |
| Aluminium | 2,127.00 | 44 | 2.1% |
| Copper | 7,195.00 | -11 | -0.2% |
| Lead | 2,065.00 | 62 | 3.1% |
| Nickel | 20,560.00 | 175 | 0.9% |
| Tin | 19,550.00 | 0 | 0.0% |
| Zinc | 1,973.50 | 2.5 | 0.1% |
The US closed fairly flat on Friday night as the market awaited Chinas Purchasing Managers Index (PMI) which came out on Sunday night. PMI fell to 51.2 from 52.1 in June which suggests slower growth in China as manufacturing grew at the slowest pace in 17 months. Despite lower PMI, Chinas full year growth could be up 9.5% from 9.1% in 2009 and generally a reading above 50 suggests growth. Lower PMI may have been due to the Chinese government measure to lower property speculation and investment in energy-intensive and polluting factories. Also putting a damper to last weeks gains was data showing the U.S. economy grew at slower pace in the second quarter. Unemployment remains high restricting consumer spending whilst the market remains cautious of another fall if the price of houses. Reports show that home sales growth declined in June for a second month and are expected to be very low in the coming months.
The price of oil rose, having its biggest monthly increase since March along with strength in other commodities such as aluminum (which rose to a 11 week high).This should be positive for our market particularly Woodside petroleum (WPL) and Alumina (AWC). Our market is likely to dip slightly today on the back of disappointing Chinese PMI data. However, we have finished the month of July strongly, up 7%, which is the best monthly gain since July 2009. August through to October historically should see the equities market higher, also evidenced by the price of gold taking a breather. There are forecasts that despite setting an all-time record of $1,265 per ounce in late-June, gold will drop to as low as $1,050 per ounce during 2010’s fourth quarter. This suggests that some risk is returning to the market, as gold has broken a two year up trend, it is a good sign of further strength to come. August sees the start of Australian reporting season which may
see further upside potential in equities, so having exposure to both bank and resource stocks may be good diversification for your portfolio for August expiry.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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