Daily Market Reports | Mar 31 2010
By Greg Peel
The Dow rose 11 points or 0.1% while the S&P was flat at 1173 and the Nasdaq gained 0.3%.
With Passover segueing into Easter this week, the month and quarter coming to an end tonight and the all-important jobs report being released on Good Friday when stock markets are closed, Wall Street was eerily quiet last night. Volumes were weak and indices fluctuated in small ranges.
Speculation over the strength or otherwise of Friday's census-impacted jobs number meant last night's economic data releases were little acted upon.
The Conference Board consumer confidence reading rebounded strongly after falling substantially last month. The figure was 56.5 in January, it fell to 46.4 in February but has jumped back to 52.5 in March, beating economist expectations. This is heartening, but one must recall this is not a 50-neutral index. A reading of 90 is considered to be about equilibrium in the confidence stakes.
The Case-Shiller 20-city house price index fell 0.4% in January to mark a 0.7% fall year on year. Eleven of the twenty major cities have seen house prices fall over twelve months, with a 17.4% drop in Las Vegas the most dramatic. The seasonally adjusted January reading was actually an increase of 0.3% but commentators suggest that while there remains evidence of stabilisation, hopes of any sort of meaningful rebound in prices are fading.
While disinterest reigned in the US, it was all happening in Europe.
Just when the markets were feeling chipper about Greece having put away a 5bn euro bond issue on Monday, secondary trading in that same seven-year maturity last night saw a rapid sell off that sent the seven-year yield racing up from 6.0% to 6.3% as traders once again dumped on Greece.
The sell-off came about as firstly as it was revealed the success of Monday's issue was a close-run thing, and secondly because the cocky Greeks decided to sweeten the pot. The Greek Treasury suddenly decided to reopen an old issue of twelve-year bonds, offering 1bn euros into a market it hoped was now more accommodating. But the move backfired when only 390m euros-worth were sold.
Greece must raise 35bn euros via bond issues in 2010 or an EU-IMF bail-out will be required. To date it has sold 18bn at an ever increasing cost in yield terms.
With the focus on Greece we tend to forget that it was Ireland which started it all amongst the eurozone nations, right at the beginning of the GFC. After all this time Ireland has not managed to resolve its issues and last night the government was forced to step in and buy 16bn of Irish bank debt, for which it paid only 53 cents in the dollar. The trade off for the “rescue” is that Irish banks must now raise billions in fresh equity capital.
While Europe wobbled once more, there was at least some good news coming out of the UK for once.
Firstly, the final revision of fourth quarter GDP came in at 0.4% compared to the previous revision of 0.3%. Thus the UK economy contracted by 4.9% in 2009. Secondly, A UK house price index showed prices are up 0.7% in March following a 0.8% drop in February, and up 9% year on year. And thirdly, a fresh poll showed the Tories inching ahead of the incumbent Labour government ahead of June's election, easing fears of an impotent hung parliament.
The Tories announced on Monday their latest plan to tackle Britain's huge deficit – cut taxes. This little taste of Reaganomics is understandably popular amongst the masses, and interesting in the face of a AAA rating on the line. In the meantime, the government was busy “dissing” Joanna Lumley, which did not go down well with Patsy fans.
The result of all of the above was that the pound rallied last night against the greenback while the euro fell, the net result being a 0.25% increase in the US dollar index to 81.49.
Gold subsequently fell US$7.80 to US$1103.00/oz but base metals continued to trading to the upside in small measures as the end-of-quarter commodity fund scramble continued.
Oil ticked up US24c to US$82.37/bbl as the annual International Energy Forum began in Cancun, attended by non-OPEC and OPEC producers alike. One presumes it's crude oil they're in Cancun to talk about, not coconut oil.
After surging the night before on commodity price increases and Uncle Glenn's fireside chat with Kochi, the Aussie was relatively steady last night at US$0.9186.
The SPI Overnight fell all of one point.
There are some important data releases today in Australia, in the form of building approvals, retail sales and private sector credit. All of these numbers should have some bearing on the RBA's interest rate decision next week, but seeing as Uncle Glenn had baked one in the pie he shared with Kochi, we can only presume they would have to be startling bad results to avoid an April rate hike.
Today is also the last day of the month and quarter in Australia so despite no lead from Wall Street it could still be a window-dressing session, if anyone has enough interest. Tomorrow is always by default a half-day despite the ASX trading through to 4pm, and as a new month ahead of a holiday, probably a “no-day”. But we'll see.
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