QBE TRADE FOR TODAY ONLY

March 3rd, 2009  by Bryden Elssmann

Closing Data

	current	change	%
Dow Jones	6763.29	-299.64	-4.2%
NASDAQ	1322.85	-54.99	-4.0%
S P 500	700.82	-34.27	-4.7%
FTSE 100	3625.83	-204.26	-5.3%
Nikkei 225	7280.15	-288.27	-3.8%
SPI Futures	3176	-56	-1.7%
All Ords	3,204.00	-93.1	-2.8%
Oil	40.07	-4.08	-9.2%
Gold	940	-2.5	-0.3%
Silver	13.05	-0.035	-0.3%
Aluminium	1270.5	-19.5	-1.5%
Copper	3330	-60	-1.8%
Lead	1024	-1	-0.1%
Nickel	9605	-70	-0.7%
Tin	11050	50	0.5%
Zinc	1078.5	3	0.3%

Wall Street

New Bear Market lows as Wall Street tumbled in Monday trading, with both the Dow and the S&P 500 falling to fresh 12-year lows. The broad sell off pushed the Dow Jones down almost 300 points, or -4.24 per cent to finish at 6763.29. The S&P 500 index also fell losing 34 points, or 4.7%, ending at 700.82, its lowest level since Oct 28, 1996.

The Dow has now broken previously held levels of technical resistance. In the, past technicians had held a series of resistance levels to predict where the Dow might bottom.  Other market benchmarks were also weaker, including the Nasdaq which fell almost 4 per cent, down 55 points to close 1322.85.

Government bailouts in every industrialised economy, redundancies and dividend cuts have done little to fix the US financial sector (and Europe) which are still in turmoil five months after the collapse of Lehman Brothers.  Investors are fleeing the financial sector until the US Government can tell the banks, namely Citigroup and Bank of America, what their assets are worth. Analysts are predicting a move toward joint ownership or “soft nationalisation” of banks. The move would see the government take ownership in struggling financiers based on the results of a “stress test” to determine which companies require additional capital to survive. The Bank of America is currently undergoing such test. Shares in the company fell 8.1 per cent, to $US3.63. The US government is also negotiating an agreement which would see it take as much as a 36 per cent stake in Citigroup as it struggles to recapitalise.

The world’s biggest economy, last quarter, had its sharpest contraction since 1982…the recession deepens.

ASX

The Australian market is expected to break fresh lows today following falls in both US and European equity markets.  The ASX200 closed down 94.4 points, or 2.82 per cent, lower at 3250, its lowest level in 5 years. Today we expect the market to test the November 21 intraday low of 3217.5 as the bear market tightens its grip.

The RBA board meets today to decide on any adjustment interest rates. Most economists expect an interest rate cut of 25-50 basis points, however, many observers believe the RBA may surprise expectations and keep the cash rate unchanged following recent data showing a sharp rise in inflation.  A 25bp reduction would take rates to 3 per cent, the lowest level since March 1960, when they reached 2.99 per cent.The outcome of the board meeting will be announced at 2:30pm AEDT

Oil was down 10.3 per cent to $US40.15 a barrel as poor economic news and falling markets abolish hopes that demand for oil will increase, in the short term.
Expect a flight to safety, bonds and US dollars, as the global sell-off in equities and commodities continues to panic investors.

QBE – Trade of the day

The stock price is currently trading around $17 having fallen from $22. The stock is ex 65c dividend tomorrow. If purchased today at $17.10 you could look to write a March $18 call and generate approximately $450 premium and collect the dividend. Please contact your adviser for more information.

Quote: We have used this before but remember it is always darkest before the dawn!

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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