Daily Market Reports | Feb 10 2009
By Greg Peel
The Dow was down 10 points and nor did the other indices trouble the scorer.
Wall Street was all set for the big announcement last night – the unveiling of the Obama administration’s new version of the TARP, or bank rescue package. But the White House announced instead that efforts to resolve the stimulus package bill to see its safe passage through the Senate had meant a postponement of the TARP announcement. Treasury secretary Tim Geithner is now scheduled to do the unveiling tonight, and at the same time it is expected the stimulus bill in its renegotiated form will pass into law.
On that news, trading was all but called off. The Dow diddled around the flatline all day without reaching too far in either direction.
The only market movement of note was in gold. Gold fell US$14.30 to US$896.90/oz just to prove that US$900 will not be conquered so easily. Recent gold buying has been attributed to uncertainty surrounding both the success of the stimulus package and the details of the TARP. As both come closer to conclusion, safe haven positions have been unwound. We may yet find that a TARP package which is well accepted by Wall Street could prove quite unfavourable for gold in the short term. In the longer term, another US$800bn out of thin air?
Oil slipped below US$40 again last night, dropping US29c to US$39.88/bbl. Traders are supposedly losing faith the Obama stimulus package will have the sort of impact on the economy needed for higher oil demand given the raft of consistently weak global data that just keep coming. The fall came despite an OPEC announcement that members will shut down 35 of 150 new drilling programs currently under way.
Oil’s fall also belied news from Iraq – once the world’s second largest supplier of oil, but no longer an OPEC member for obvious reasons. Iraq announced that it, too, would introduce production cuts to match those of its former OPEC colleagues. The Iraqi oil minister declared that US$70/bbl is the preferred price. In that case I hope he owns a fleet of Hummers.
The delay in the TARP announcement also saw a bit of an exit from the US dollar, enough for the Aussie to battle its way up another half a cent to US$0.6802. It is notable that both oil and gold fell in defiance of greenback weakness.
London base metals went nowhere.
The SPI Overnight fell 7 points.
The sun’ll come out, tomorrow / It’s only a day away. Or something like that. We’d better hope Wall Street likes it.
