Daily Market Reports | Apr 24 2008
By Greg Peel
The Dow rose 43 points or 0.3% while the S&P added 0.3% and the Nasdaq 1.2%. Volume was thin.
On a day totally devoid of any economic data, and without a significant move in the oil price to spoil the party, Wall Street played roundabouts on various earnings announcements. The session took off with a strong profit result from aircraft manufacturer and Dow component Boeing, which is now managing to deliver new planes to eager customers. Boeing shares were up 4.5%.
Boeing saw the Dow to the day’s high of up 117 points before a rapid descent ensued on the earnings report from troubled monoline insurer Ambac. The company shocked with a US$1.66bn loss for the quarter and the shares fell 43%. The Dow fell back to unchanged.
From there on the results were more positive than negative, particularly in the tech space. The Nasdaq thus had a good day while the Dow limped back to up 43. However, once again there were few guests at the party to join in the parlour games.
For the first in a number of weeks the weekly US oil inventory data showed an increase, even more so than the market expected. The market has been expecting an increase every week but for a while has been getting decreases instead. (There are still questions being asked as to why the Bush Administration needs to stock up the Strategic Oil Reserve at this level). Oil initially fell, but then it was met by the influence of a rising US dollar.
The US dollar bounced back from the euro US$1.60 level yesterday and last night an economic release in Europe showed that while the EU’s service sector is strong, its manufacturing sector is starting to feel the effects of a strong euro. Yesterday the market was spooked into believing the ECB might raise rates to fight inflation but this number suggested a continuation of “on hold” was more likely. The euro thus fell back to US$1.5884 and the US dollar also rose against other currencies.
So oil ultimately closed US23c higher, but last night the May contract rolled into June. The discount to June began at US$1.43 so last night’s price rise now takes the benchmark to US$118.30/bbl. Don’t get caught out by anyone suggesting this is “fall” from yesterday.
And with the rise in the dollar well…it had to happen – Gold fell US$12.10 to US$904.80/oz. The Aussie finished up about US0.4c to US$0.9489 having traded over 95 following yesterday’s CPI result.
Base metals were once again mixed and listless, with the exception of tin. Tin jumped an extraordinary 7.5% in late London trade as inventory figures confirmed global tightness of supply. The higher greenback was otherwise a dampener, and caution is evident as the strike in Chile is rumoured to be reaching a resolution. The other metals all fell 1-2%, although aluminium was steady. Tin is now into blue sky territory and is the latest darling of the speculators.
The SPI Overnight rose 18 points. Is this a day to test 5700? After yesterday’s strength, which left many in the market bemused, it may be a day to square up ahead of the long weekend. Wall Street will have two sessions before we resume on Monday.
Aftermarket activity on Wall Street was not positive. Amazon posted a result that looked alright but the shares are down 5% in late trade. Apple posted a result that looked great on first read, but while the shares popped up 6% on the release they are down 2% now. It was a different story for reputed coffee retailer Starbucks, whose weak second quarter guidance (the company suggested current economic conditions were the worst in the company’s history) sent the shares down 12%.
Have a great Anzac Day.
