United States

Panic gave way to simple anxiety on Wall Street last night as the only news of any consequence was a fall in the oil price.

Mixed, with a lack of conviction, is the way last night’s trading US stock markets could be described as the Dow recovered early losses to finish higher. We are now playing a waiting game.

Comparisons with 1998, and a quick look at the upcoming mortgage reset situation in the US, suggest today’s rally hasn’t necessarily marked a bottom.

This week is virtually devoid of data from the US, which might be a good thing, while Australia is not laden either, but this is Week one of the two busiest results weeks.

The US Fed back-flipped on Friday, declaring an appreciable downside risk to the US economy. In cutting its discount rate, the Fed sparked a 233 point rally in the Dow.

In an extraordinary night that followed an extraordinary day, commodity prices collapsed, US bond yields were clipped, the yen accelerated its buyback and Wall Street found a bottom.

The crisis formerly known as subprime is reaching the status of an emergency. And as we speak, two hurricanes are brewing in the south.

Credit problems at a leveraged prime mortgage lender and lowered expectations from Wal-Mart conspired to send the Dow tumbling 200 points once more.

The Dow spent all day in solid positive territory on low volume, only to slip away at the death.

Global central banks had little choice but to inject liquidity into a rapidly freezing global banking system last week. But could this prove more harmful than beneficial in the long run?