Daily Market Reports | Feb 19 2008
By Greg Peel
Remember Martin Luther King Day? It was January 21 and Wall Street was closed. The UK and Europe were open however, and no one could quite figure out why stock markets across the Atlantic completely fell out of bed. It was unusual for them to act quite so independently. Whatever the reason, Asia followed suit on the Tuesday, and Australia chimed in with a 7% routing. Indications for the Dow opening on the Tuesday night were of a +600 point fall.
But the Fed made an emergency 75 point rate cut and Wall Street, and the world, bounced back from the brink. It was about a week later that everyone realised the selling in Europe was driven by SocGen, who had just discovered its US$8bn rogue.
It was another holiday on Wall Street last night, but the good news is Europe had a very positive session. London was up 2.75%, Germany 2% and France 1.9%. The catalyst was press speculation over the weekend that European banks may actually raise there dividends – unlike the US – as sovereign wealth funds from Asia look to increase their holdings.
Otherwise, the list of US closures include stocks, bonds and oil. Gold rallied US$4.20 to US$906.20/oz in global trade. The Aussie dollar ticked up further in the local session yesterday, to sit 50bps higher at US$0.9135 from Saturday morning.
Base metals were alive and well. In London copper was once again the flavour in a thin but effective session. A continual drawdown on inventories saw copper rise 3%, while zinc and lead added 2% and nickel and aluminium around 1%.
The SPI Overnight fell 10 points.
