Renewed fears shake markets
March 31st, 2009 by Bryden Elssmann
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 7522.02 | -254.16 | -3.3% |
| NASDAQ | 1501.8 | -43.4 | -2.8% |
| S P 500 | 787.53 | -28.41 | -3.5% |
| FTSE 100 | 3762.91 | -135.94 | -3.5% |
| Nikkei 225 | 8236.08 | -390.89 | -4.5% |
| SPI Futures | 3600 | -16 | -0.4% |
| All Ords | 3,554.00 | -61.4 | -1.7% |
| Oil | 48.49 | -3.92 | -7.5% |
| Gold | 915.5 | -7.7 | -0.8% |
| Silver | 13.033 | -0.23 | -1.7% |
| Aluminium | 1381 | -29 | -2.1% |
| Copper | 3946 | -132 | -3.2% |
| Lead | 1255 | -55.5 | -4.2% |
| Nickel | 9500 | -280 | -2.9% |
| Tin | 10210 | -95 | -0.9% |
| Zinc | 1283 | -26 | -2.0% |
Just when confidence was beginning to return, Wall Street tumbles. U.S. stocks fell the most in three weeks as prospects of a bankruptcy for General Motors and fears that banks may not pass their "stress tests" undermined recent market highs. The Dow fell 254.16 points, or 3.27%, to 7522.02, reducing gains for March to 6.5%. The Dow is still 16% above its bear-market closing low on March 9. The S&P500 fell 28.41, or 3.48%, to 787.53, though it's still up 7.1% for March.
President Obama gave General Motors and Chrysler a short-term lifeline, but warned that bankruptcy still looms for the troubled automakers. The Obama administration said the car manufacturers need to restructure in order to qualify for $US6 billion in government aid. GM shares dropped 25% to $2.70.
The US Treasury Secretary, Timothy Geithner, warned some banks will need “large amounts of assistance”. His comments shook already wary investors, driving the market down; Bank of America lost 18% and Citigroup fell 12%.
European and Asian markets echoed fears from Wall Street. The German DAX 30 was down 5.1% while French markets fell 4.27% on renewed concerns the Eurozone faces a difficult year ahead and the economy will only recover gradually. Economists are expecting the European Central Bank to cut its key rate when it meets this Thursday. Spain had to rescue a bank yesterday.
The Australian market is expected to fall for a second straight day. Oil has fallen below $US50 a barrel down $US4.00 to $US48.50. Debate is still out as to what level prices will normalise, $US40 to $US50 while OPEC has previously said that oil must remain above $US70. Woodside Petroleum (WPL) has fallen from its week high of $43, closing at $39.21. WPL is expected to fill a gap at $38.55 today.
The latest theory on Wall Street is that the indexes will test their lows. The S&P 500 had a triple bottom in July-2002, October-2002 and March-2003 before the market recovered. It is now expected the market is experiencing a short term correction with a rally toward 900 in May then a retracement toward 800 forming a strong base for the market…. But “Who really knows?”.
“ Markets can remain irrational longer than you can remain solvent” -John Maynard Keynes.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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