Daily Market Reports | May 03 2008
By Greg Peel
The Dow closed up 48 points or 0.4%. The S&P rose 0.3% and the Nasdaq fell 0.1%.
The Dow peaked earlier at +122 before Wall Street decided to go to lunch and not come back. Profit-taking after a positive but trying week killed off the early rally which was sparked by a largely positive jobs number. The Nasdaq became the odd man out when tech frenzy got a bit of a wake-up call. Sun Microsystems’ poor result saw its shares fall 22%.
The April jobs figure showed a fall of only 20,000 jobs when a figure of 75,000 was the consensus. The unemployment rate, which many had presumed would rise again, fell from 5.1% to 5.0%. This was a positive influence and the mood was boosted by an increase of 1.4% in March factory orders when only 0.2% was expected.
The US dollar continued its recent buoyancy on the news, the euro falling again to US$1.5424. However, the positive economic data provided confusion for commodity prices, which shrugged off a rising dollar and squared back after some significant falls this week.
Gold rose US$3.70 to US$855.60/oz after having tested support at US$850 yesterday. The Aussie was little changed at US$0.9351.
Base metal prices were mostly stronger in London, led by copper and aluminium which both clawed back 2%. Metals are finding it difficult to speculatively reverse on the stronger greenback as warnings of supply weakness intensify. The positive US data also challenges any reasons to sell.
Wheat also found its way back 2.5%.
And it was back to normal programming for oil. The Turkish government must be long crude, as after oil finally looked like it might fall below US$110 again Turkey decided to fly a couple of bombing raids into Kurdish northern Iraq. Here we go again. Oil jumped US$3.80 to US$116.32/bbl, which would have also helped the decisions to profit-take late in the stock market.
The SPI Overnight rose 60 points, which was a very strong response after a big day on Friday and nothing dramatic from the Dow. Given the ASX 200 closed right on very significant resistance at 5700 on Friday, the futures are indicating a solid break of that level on Monday. The market has tried to climb the mountain to 5700 on many occasions in 2008 before succumbing to weak influences. If a break of the level is emphatically consolidated on Monday, then we could be set for some real strength. It would be unsurprising if the index decided it better do a bit of work there first however.
The ongoing internet war took another tedious step late on Friday as Microsoft supposedly upped its bid for Yahoo. The figure was not released, but is suspected to be US$35. The earlier offer was US$31. Whatever happens between Microsoft, Yahoo and observant protagonist Google will surely pique the interest of the antitrust watchdogs. This could go on for a while.
Investment guru Warren Buffet’s Berkshire Hathaway announced profit of US$904m in the first quarter; 64% below the US$2.6bn the firm achieved in the first quarter of 2007. Bummer.
Late News: Micrososft later withdrew its bid for Yahoo altogether. Yahoo told Micrososoft US$35bn was still pathetic and it wanted US$53bn. Microsoft’s response can’t be printed.
