FYI | Sep 30 2007
By Greg Peel
Welcome to your abbreviated holiday weekend report.
The Dow finished down 17 points or 0.1% on Friday as books were squared for the end of the quarter. The S&P and Nasdaq fell 0.3% each.
Economic data released on Friday were positive in terms of indicating a still relatively healthy economy. August consumer spending rose 0.6% to be the fastest growth in two years. Michigan University found consumer sentiment remained steady in September. August construction spending surprisingly rose 0.2% while the Chicago PMI also surprised with an increase.
The August consumer spending number implied year-on-year inflation of 1.8%, which is the lowest level since 2004. Thus while the data reduced hopes of a further rate cut in October the inflation number leaves plenty of room to ease again at some point.
Corporate asset-backed paper issues fell 17% for the week suggesting that while credit activity has returned in prime securities there remains reluctance at the riskier end.
The low inflation number forced the US dollar down yet lower against the euro to another record of 1.4274 and sent gold soaring again – by US$9.30 to US$743.10/oz. Gold’s rise came despite some profit taking in oil which fell US$1.22 to US$81.66/bbl. The Aussie pushed onward to US$0.8879 which I think might exceed the pre-crunch high.
Base metals were slightly lower, with profit-taking in lead and nickel causing stand-out 4% falls.
The SPI Overnight was up 19 points.
