Daily Market Reports | Jun 22 2010
By Rudi Filapek-Vandyck
Yesterday I predicted the global boost in optimism post the Chinese weekend PR stunt wouldn't last beyond 24 hours unless investors were given something additional to cheer about, and that's exactly the scenario that unfolded overnight.
Following on from a burst of optimism across financial markets in Asia and Europe, equity markets in the US took off on a similar positive footing, but gradually the momentum faded and by the end of the session double digit gains had been replaced with minor to middling losses.
It didn't help, of course, that Meredith Whitney, elevated to status of market guru since she correctly called the problems at Citigroup and other banks throughout the GFC, returned to centre stage by declaring a double dip was looking realistic for the US economy.
Earlier, a credit downgrade for French bank BNP Paribas by Fitch Ratings had reminded investors what they had been worried about prior to the weekend: Europe.
For those subscribers who have already read my Weekly Insights story from late yesterday (others: check your email), here's one observation to add to the story: fears of a double dip recession were only named by a small minority at last week's UBS seminar, but if Glushkin Sheff's David Rosenberg is correct, this group is growing nevertheless.
Last night's outing by Meredith Whitney certainly seems to suggest Rosenberg's observation is correct.
In the end, the Dow Jones Industrial Average dropped 8.23 points, or 0.08%, to 10442.41. Its first drop in five sessions.
The Standard & Poor's 500 index slid 4.31, or 0.39%, to 1113.20. All of the measure's sectors fell except materials and industrials. The Nasdaq composite tumbled 20.71, or 0.9%, to 2289.09, marking the end of a seven-day winning streak. It was also the index's biggest one-day drop in two weeks.
Commodities continued their surge post the yuan-optimism, but this is unlikely to provide any guide for the Tuesday session, as the overall reversal in risk appetite occurred after the London Metals Exchange had closed.
As the US dollar regained market favour, crude oil and gold lost all earlier gains and ended in the red. WTI oil is back at US$77 per barrel, gold is now back at US$1232/oz.
Similarly, the Aussie dollar stormed higher and higher, but ultimately couldn't withstand the USD pressure.
At the time of writing this report, the Australian SPI 200 September 10 futures contract was down 30 points or 0.7% to 4569.
Greg Peel is about to return from a well-deserved break. Thursday's Overnight Report will again carry his name as the author.
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