Daily Market Reports | Jan 31 2009
By Greg Peel
The Dow fell 148 points or 1.8% while the S&P fell 2.3% and the Nasdaq 2.1%.
The much anticipated fourth quarter US GDP (first guess) was released last night. At negative 3.8% you’d be forgiven for thinking it wasn’t such a bad result. Pundits were convinced a number exceeding minus 5% was on the cards. But there’s no pleasing some people, and as soon as the number flashed on screens there was a collective shrug around Wall Street and a warning that it’s the first quarter 2009 which will tell the real tale. Stocks were sold, and the last trading day in January saw a record 8.6% fall for the month – the worst in January history, ever, according to Dow Jones.
Since 1950 the direction of the market in January has predicted the direction of the market for the year in about 90% of cases apparently. But we’ll ignore that.
Aside from the GDP number the market was spooked by a CNBC report that Bad Bank, as a policy, had hit a “snag”. It’s not quite clear what that snag actually is, but given a lot of players on Wall Street see the Bad Bank model as some sort of panacea the news was met with a level of despair.
It didn’t stop the US dollar from rallying however. In a pretty good parody of The Undead, the greenback rallied on the GDP news given the word from across the pond was that EU inflation had hit a 10-year low and unemployment a 2-year high. The Aussie was caught in the crossfire, falling one and a half cents to US$0.6371.
But gold was the star, ignoring the US dollar and rallying US$20.80 to US$927.10/oz and causing a buzz across the globe. Is US$900 now breached?
Oil followed gold, rising US27c to US$41.71/bb, while base metals were mildly weaker in London.
The SPI Overnight fell 64 points.
But Jeff Beck stole the night (in Sydney) at the Enmore.
