Markets Likely Weighed Down by Profit Taking
July 17th, 2009 by Cale McCulloch
Closing Data
| Current | +/- | % | |
|---|---|---|---|
| Dow Jones | 8711.82 | 95.61 | 1.1% |
| NASDAQ | 1885.03 | 22.13 | 1.2% |
| S P 500 | 940.74 | 8.06 | 0.9% |
| FTSE 100 | 4361.84 | 15.38 | 0.4% |
| Nikkei 225 | 9344.16 | 74.91 | 0.8% |
| US Bond 10 Yr | 3.5709 | -0.0349 | -1.0% |
| US Bond 30 Yr | 4.447 | -0.0435 | -1.0% |
| COMEX Gold - Aug 09 | 935.4 | -4 | -0.4% |
| COMEX Silver - Jul 09 | 13.235 | 0.027 | 0.2% |
| COMEX Copper - Jul 09 | 238.95 | -0.25 | -0.1% |
| WTI Spot | 62.07 | 0.58 | 0.9% |
| Copper - Cash | 5270.5 | -1 | -0.0% |
| Copper - 3Mth | 5260 | 0 | 0.0% |
| Lead - Cash | 1598 | -14 | -0.9% |
| Lead - 3Mth | 1620 | -15 | -0.9% |
| Zinc - Cash | 1526 | 8.5 | 0.6% |
| Zinc - 3Mth | 1550 | 8 | 0.5% |
| Aluminum - Cash | 1667.25 | 40.5 | 2.5% |
| Aluminum 3Mth | 1695 | 40 | 2.4% |
| Nickel - Cash | 16021 | 160 | 1.0% |
| Nickel - 3Mth | 16100 | 160 | 1.0% |
| Tin - Cash | 13128 | -332 | -2.5% |
| Tin - 3Mth | 13025 | -275 | -2.1% |
U.S markets moved higher over night, continuing the strong gains from earlier in the week. Lighting the fire was unemployment data, namely the better than expected jobless claims combined with the better than expected earnings from JP Morgan that followed on from the momentum that started with Goldman Sachs in the financial sector. Add to this the fact that even the most bearish of economists began to upgrade their growth forecasts for the year, and the market was set for a continuation of a rally that has caught many off guard.
Although profit results appear to be doing quite well, there is still a flood of negativity that is restraining the potential of markets to move higher to a certain degree. Namely the problems surrounding CIT at present, which is looking set to be the first of the institutions that received TARP funds to fail. This came out after it was deemed that they, unlike other institutions rescued by the government, is not “to big to fail” and the systemic risk of such a collapse would not freeze credit markets even though the retail fallout that will result may be horrific.
On the commodities front, Base metals were mixed with Copper, Lead and Tin all giving back some of the earlier gains, while Zinc, aluminium and Nickel managed to edge higher. Oil climbed back above USD 62 per barrel, putting on about 50c, and Gold fell USD 4 an ounce to close at 935 a Troy Ounce.
The Big miners are likely to hold onto the week’s gains, although I would not be looking for standout performances from the sector locally following a relatively flat night in the sector. The SPI has us opening 31 points higher this morning, with gains likely driven by the banking sector, as well as Insurance and retail. A couple of stocks that have picked up pace as unlikely outperformers are Woolworths (WOW), QBE and NAB. All three could potentially be breaking out, with WOW likely to push up towards 29 per share in coming weeks ahead of their reporting in August. While QBE held up well through the 300 odd point pull back on the market, and looks to be gaining some traction ahead of reporting also, a very bullish close for QBE yesterday on the highs, and potentially breaking out for a move higher of about 10%.
All in all, gains will likely be restricted to staying below the calendar year high on the XJO at 4044, unless there is a catalyst to push the market through that point, which would most likely need to come from Asia this morning.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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