Markets To Stumble On Chinese Policies...
April 20th, 2010 by Cale McCulloch
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 11,092.05 | 73.39 | 0.7% |
| NASDAQ | 2,480.11 | -1.15 | -0.0% |
| S P 500 | 1,197.52 | 5.39 | 0.5% |
| FTSE 100 | 5,727.91 | -16.05 | -0.3% |
| Nikkei 225 | 10,908.77 | -193.41 | -1.7% |
| ASX 200 | 4,915.10 | -69.6 | -1.4% |
| COMEX Gold - Dec 09 | 1,136.00 | -0.9 | -0.1% |
| COMEX Silver - Sep 09 | 17.731 | 0.056 | 0.3% |
| COMEX Copper - Sep 09 | 349.8 | -1.65 | -0.5% |
| WTI Spot | 83.32 | -1.06 | -1.3% |
| AUD-USD | 0.9242 | 0.0027 | 0.3% |
| Aluminium | 2,447.50 | 23.5 | 1.0% |
| Copper | 7,905.50 | 30.5 | 0.4% |
| Lead | 2,368.00 | 78 | 3.4% |
| Nickel | 27,600.00 | 910 | 3.4% |
| Tin | 19,135.00 | 380 | 2.0% |
| Zinc | 2,488.50 | 94.5 | 3.9% |
US stock markets managed to recover some of Friday nights sell off, with the Dow ending the session higher by 73 points. The S&P closed 5.39 points higher but the NASDAQ bucked the trend to close lower by just 1 point. The gains put an end to the biggest global slide in equity prices since February. Helping the gains was a reversal in the shares of Goldman Sachs after news emerged that officials at the SEC voted 3 to 2 in favour of suing Goldmans, the less than unanimous decision brought confidence in the chances of Goldman Sachs successfully defending the allegations. Shares in Goldman Sachs managed gains of 1.6% for the session, having fallen by as much as 3.6% earlier on in the day.
Also adding to confidence throughout the session was a report out of Daimler, the world’s second largest maker of Luxury cars, that reported earnings of 1.2 Billion Euros, leading to a 5.7% rally in the company’s share price. Commodity shares failed to rally, with BHP and other major miners trading lower once again on the back of ongoing concerns about China’s economic stability.
Base metals continued to slide, with across the board weakness seeing the metals end lower by between 0.03 and 3%. Gold gave back an additional USD 1.20 per troy Ounce and Oil shed another 1.5%. The weakness in commodities combined with a dramatic sell off on the Shanghai market yesterday should keep any gains locally pretty well capped today, despite the SPI futures pointing to a 33 point gain on the open.
Chinese markets plunged after the government flew the Communist flag proudly, ordering banks to stop lending to individuals for the purpose of purchasing a 3rd home… you can look at this however you like, but at the end of the day it is not a measure to stop a bubble from being created, rather a massive government backed pin to help it pop before it gets too big and puts the economic stability of the country at risk. Essentially this measure should see a reduction in construction, and a fall in house prices (probably quite dramatically) in the short/medium term, which will hurt the wealthy far more than the poor. The benefit to doing this now is that it will not allow middle class individuals to borrow more than they can afford and lead to enormous loan losses for banks as they fail to make repayments when home prices collapse in the future… as was the case in the US.
All up… keep a very close eye on the markets for now, concerns about the Chinese growth story will bring weakness to the Big miners and the Australian market more generally.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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