Daily Market Reports | Jun 30 2009
By Greg Peel
The Dow rose 90 points or 1.1% to close back over 8500. The S&P gained 0.9% to 927 and the Nasdaq gained 0.3%.
Wall Street shot up in early trade and held its levels to the close. Volume was anaemic, for a number of reasons. Firstly, it is now the height of summer and there are tumbleweeds rolling through the NYSE ahead of the Independence Day long weekend. Secondly, there were no data releases last night. Thirdly, Thursday sees the release of the monthly employment number, which is rapidly becoming the most important of all data, and no one wants to get too carried away ahead of it. Fourthly, the quarter ends tomorrow and most positions have been wound down.
In the last case, the door is open in a low volume scenario to push the market to where you want it to close. Fund managers live and die by their quarterly returns, as such numbers can determine with whom investors will entrust their savings next quarter. For Australia we’re talking annual returns at the end of FY09. A little bit of a push up at the death can mean a few basis points of difference. The stock can always be sold again next week. This is what’s known as “window dressing”.
So nothing much of any interest happened last night. Goldman Sachs upgraded Microsoft ahead of the release of its new Windows 7 operating system. In about-face number fifteen, China qualified its comments in support of an alternative currency, made late last week, by suggesting it was a very long term proposition. Ponzi schemer Bernie Madoff got 150 years.
The US dollar index edged up a tad, gold fell US$3.30 to US$937.40/oz, the Aussie barely moved at US$0.8082, and base metals might as well have taken the day off.
The only interest was in the oil market. Renewed rebel activity in Nigeria and news that Shell had shut down some production as a result had oil trading up US$2.33 to US$71.49/bbl. The buyers were also encouraged by talk from OPEC that it was comfortable with a US$70-80/bbl range (which is pretty much what it has always said) and unconfirmed news from Japan that China intends to increase its strategic oil reserves by 160% over the next five years. That’s not exactly a scoop either.
What the oil market ignored, nevertheless, was a report from the International Energy Agency suggesting the impact of the GFC will mean, at best, world oil demand will fall to only 0.6% per annum growth out to 2014 or, at worst, contract by 0.2% per annum. Next week the IEA will say something else.
The SPI Overnight rose 41 points or 1.1%, for reasons known only to itself. Assuming SPI traders aren’t silly enough just to take the Dow move as a guide, there must be some window dressing expectations in today’s trade – the last of FY09. Don’t forget, however, there could be last minute tax-selling coming the other way.
It’s all a bit of a lottery.
