Daily Market Reports | Feb 22 2011
By Greg Peel
There is a rumour that Libya president Muammar Gaddafi has fled to Venezuela but this has been denied by the Venezuelans. We do know that Gaddafi has been abandoned by his UN representatives and that there have been other defections from within the regime. It seems likely now that after 42 years, Gaddafi will go the same way as Mubarak.
The people power movement has moved west again to the the 1,000 year-old monarchy of Morocco, completing the line up of the entire North African coast. Over on the Arabian Peninsular, Yemen's leader has refused to step down.
I suggested in this Report last week that the Arab uprising is arguably the new “Berlin Wall”. One is reminded that post the joyous displays of the fall of the Wall, the Former Soviet Union, with the exception of a reunited East Germany, fell into chaos. This allowed the rise of the Russian oligarchs, of the Russian Mafia, and several years later the default of Russian debt.
When the Shah of Iran was deposed in 1979, the initial government was democratic and largely secular. It wasn't long, nevertheless, before the Islamic hardliners moved in and changed that tune. And just as potentially destructive as Muslim hatred of Israel is hatred between Sunni and Shi-ite Muslims. My co-guest on Business View on the Sky Business channel last Friday, Andrew Critchlow, who has spent many years in the Middle East, is predicting a pan-Arab war.
Australian stocks fell yesterday on the news of brutal oppression in Libya and Europe followed suit last night. London, France and Germany were all down around 1.5% but Italy, which has close ties with Libya, fell 3.6%.
Escalating Arab unrest is not good news for the fledgling global economic recovery were the price of oil to skyrocket. Brent crude rose US$2.46 last night to US$105.00/bbl while WTI jumped US$5.22, or 6%, to US$91.42/bbl.
Gold awoke from its slumber last night and jumped US$20.50 to US$1406.60/oz but that's only a 1.5% increase. Silver rose 4.3% or US$1.39 to US$33.91/oz.
While there was some movement towards the US dollar, this was offset by increased inflation expectations for the UK and Europe, based on high oil prices, sending buyers into the pound and euro on rate rise assumptions. The US dollar index was steady at 77.70. The Aussie has slipped 0.5% to US$1.0094.
Note that there have been Arab-inspired murmurs among the Chinese masses.
Base metals in London had fundamental issues to contend with, such as a 5% reduction in Vale's nickel production guidance, but Arab unrest kept a lid on. Metals were up 1-2% except for copper which again remained relatively steady.
After already losing ground on Libyan issues yesterday, the SPI Overnight was up 3 points.
There is a wealth of local company profit reports out today. Please refer to the FNArena Calendar for details.
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