Oil breaks out – is it sustainable?

“The rally in oil from the low $30s is technically impressive against the weak global demand backdrop and elevated inventories.

“Oil prices reached $62/bbl last week, despite lofty US oil inventories (notwithstanding this week’s inventory decline) and the fact that Americans are driving much less than last year. The higher price of oil reflects in part the upturn in Chinese oil imports and car sales at a time when oil production is lagging. Russia continues to have difficulty boosting output and oil production has been flat for most OPEC countries. Saudi Arabia has cut production sharply.

“As with other commodities, oil should benefit from both a weaker US dollar and a shift in investor portfolio preference toward real assets as a hedge against inflation. The upturn in our global leading economic indicators is another positive sign for the commodity complex. Bottom line: Our strategists have upgraded commodities to overweight recently, with energy at the top of the buy list. Investors should consider playing the oil bull market by buying North American exploration and production stocks, or by going long the Norwegian krone and the Canadian dollar.”

Source: BCA Research

Oil Outperforming Oil Stocks

While the price of oil has risen from the $30s to $50, oil stocks have not really rallied much.  Below we highlight the ratio of oil stocks (S&P 500 Oil & Gas index) to oil (the commodity).  When the line is rising, oil stocks are outperforming oil, and vice versa for a declining line.  As shown below, when oil spiked in early 2008, the ratio dropped to its lowest level in years.  Then when oil tanked in late 2008, the ratio spiked to its highest level in years as oil stocks held up much better.  Recently, however, oil has rallied and oil stocks have been stagnant, causing the ratio to come back down.  At the moment, the ratio is resting just above the average since 1990.

Source: Bespoken Research

ASX Market Report 20-4-09

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Dow up 5. Up 65 at best. Down 39 at worst. A major bank make positive comments about the housing market and we saw some encouraging results including both Google and GE who both topped earnings expectations. Financials led the way as Citigroup.s result wasn.t as bad as expected. A bit of interest around as volumes were the highest in a month.

• The SFE Futures suggested a 33 point rise in the market.
• BHP and RIO both down in ADR form Friday . down 1.1% and 3.37% respectively. (BHP closed at the equivalent of 3308c, down 33c on Friday.s close.)
• Metals all up Friday . Copper up 1.61%, Zinc 4.01% and Aluminium 0.27%. Nickel up 3.01%.
• Oil price up 39c to $50.36.
• Gold down $11.90 to $867.90.
• Bonds down with the 10 year yield up to 2.9470%.
• A$/US$ down 0.18% to 72.34c.
• Citigroup down 9% Friday (still up 21% for the week) . the negative quarterly EPS figure was not as bad as expected, but they predicted that losses will increase in the 2Q and said they don.t anticipate credit costs to decrease from prior forecasts. The market obviously realized that it was a change in accounting rules which assisted in the bank.s better-than-expected numbers.
• General Electric up 1% - posted quarterly earnings above expectations restoring some confidence after recent concerns regarding the financial viability of GE Capital and their dividend and rating cut.
• The White House said it will support Congressional efforts to clamp down of credit card fraud.
• Google up nearly a 1% after quarterly results topped expectations . it reported record high adjusted earnings.
• Housing stocks up on the positive comments from BB&T.
• Exxon Mobil displaced Wal-Mart to no. 2 on the 2009 Fortune 500 list . a closed watched list that ranks companies by their revenues.

The market is down 41. The SFE Futures suggested a 33 point rise in the market this morning. Resources doing the damage . down 2.1% – BHP and RIO down 2.3% and 4.1%. Financials down 0.7% despite the solid performance in the US Friday. Australian 1Q Producer Prices fell more than expected . down 0.4% – market was expecting a 0.6% rise in the 1Q.

A Significance to the Gold/Oil Ratio?

Is there a hidden connection behind the Gold to Oil ratio? Some would say yes. We have often called Gold the King of Money, while Crude Oil (sometimes called Black Gold) is clearly the King of Commodities. Many hold the view that both Gold and Oil are a direct reflection of US dollar value ; as the value of the dollar falls, so gold and oil rise. From 1999 to 2009 gold has risen from $255 to as high as $1,000 while oil has risen from $12 to its peak of $147.

In 1999 when the commodity bull market began, the ratio between the gold and oil price was 21:1 (where it would take 21 barrels of oil to buy 1 oz of gold). Does this ratio offer us an indication of something deeper, or is it simply some arbitrary variation between the King of Money and the King of Commodities?

The last several years the ratio has been reasonably stable, ranging between 8:1 to 10:1. For example, in early 2006 the bull market in commodities was now seven years old; Gold was trading at $560, Oil at $62 and the ratio 9:1.Two years later in early 2008 Gold was $835, Oil $100 and the ratio 8.5:1. At this point it could be argued that the two had risen together, each equaling reflecting a loss of value in the dollar.

However the end of 2008 shows a very different picture. Now Gold was trading at $844 but Oil was at $39.50 and the ratio all the way up to 21:1. What had changed for oil? Global demand hadn’t fallen significantly, nor had the fact changed that we are only discovering 1 barrel for every 8 we consume.
Did the ratio change signify a simple slowdown in world trade? Or could it be indicating a greater importance being placed on money, a representation of ‘value’ than on commodities, a representation of ‘things’?

Where is the ratio now? Today the ratio was 17.7:1 and trending back to its average.

Tricom Today Australian Stock Report 2-4-09

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The SFE Futures suggested a 58 point rise in the market. BHP and RIO both up in ADR form overnight – 1.93% and 3.04% respectively. (BHP closed at the equivalent of 3254c, up 44c on yesterday’s close.) Metals mixed overnight – Copper up 0.50%, Zinc down 0.61% and Aluminium down 0.50%. Nickel up 2.54%. Oil price down 2.4% to $48.46. Gold up $2.70 to $927.70. Bonds up with the 10 year yield down to 2.6575%. A$/US$ up 1.02% to 69.85c.

Financials up – Treasury’s Geithner made positive comments about the strengthening of US financials. Citigroup and JP Morgan up on the comments. Only 3 times in the history of the Dow Jones has the index swung over 20% in both
positive and negative directions in the same quarter. Homebuilders up on the better-than-expected pending homes sales data.

March was pitiful for the car manufacturers – General Motors down posting monthly sales down 45% on-year. Obama said a swift bankruptcy would be the best way for the car manufacturer to restructure and become a profitable producer again. Ford posted monthly sales down 41%. Toyota’s and Chrysler’s down 39%. Honda’s down 36%
saying the will partly cut production in North America. Healthcare stocks down- Biotec Celgene issued a profit warning.

The SFE Futures suggested a 58 point rise in the market this morning. 3706 on the ASX 200 is seen as resistance (the recent high), a break of that will target 3817. Now 3677. All sectors up. The banks are doing well on the back of a strong night in US financials on comments about “signs of financial recovery” from the US Treasury’s Geithner.

Tricom Today ASX Stock Report 1-4-09

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BHP and RIO both up in ADR form overnight – 3.58% and 0.80% respectively. (BHP closed at the equivalent of 3222c, up 31c on yesterday’s close.) Metals mostly up overnight – Copper up 3.32%, Zinc up 0.38% and Aluminium down 0.14%. Nickel up 2.87%. Oil price up 2.4% to $49.67. Oil locked in its largest monthly rise since May last year – largely due to the rally in equity markets and the lower US dollar. Gold up $7.10 to $922.60. Bonds down with the 10 year yield up to 2.6674%. A$/US$ up 1.61% to 69.23c. Financials up 6.7% – up 8.1% at best. Up 17.6% over March.

The TED spread (the difference between 3-month Treasury bills and 3-month Libor) dropped under the 1% mark again, encouraging the rise in financials. Technology stocks up – Brokerage Davenport moved Microsoft to a BUY on the increased sales of computers in China and the United States. Said there is the potential of restocking to come in Europe. Material stocks up- Alcoa up 10% after falling 14% the previous day, on rumours BHP is about to make a takeover play on the Aluminium producer. Deutsche Bank upgraded the stock a week before its 4Q results.
General Motors new CEO said bankruptcy is ‘more probable’ under the new tougher requirements for government aid. GM is already planning to shut 5 plants, is likely to have to ‘take more measures’.

The market is down 1. The SFE Futures suggested a 27 point gain this morning. The big news today is Oz Minerals receiving another bid from Minmetals excluding Prominent Hill and Wayne Swan giving Hunan Valin the green light to buy a 17.55% stake in FMG. Property Trusts dong well today. Industrials down 1.7%. Financials up 0.3%.

Oil ETF -DBO

PowerShares DB Oil Fund – DBO give investors the ability to gain exposure to Oil without having to deal  with contract expiry,  margin maintenance and an account balance of at least 15k.

Using ETF -DBO Oil fund  investors can take a position as an Equity or a CFD  which provides you with leverage.

As you can see in the charts below, DBO tracks the exact movement of the price of Oil. For every $1 movement in the ETF price is a $2.4 movement in the Oil price.

DBO – ETF

Oil – Futures

To View the ETFs available on Tricom Trader click on the link below:

http://www.totaltrader.com.au/trading-platform/free-trader-demo/

Tricom Today ASX Stock Market Report 31-3-09

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The SFE Futures suggested a 57 point fall this morning. BHP and RIO both down in ADR form, 6.2% and 5.7% respectively. Metals all down overnight – Copper down 3.4%, Zinc down 2.5% and Aluminium 1.83%. Nickel down 1.29%. Oil price down 7.5% to $48.49. Gold down $7.70 to $915.50. Bonds up with the 10 year yield down to 2.71%. A$/US$ down to 68.13c. Biggest fall in 3 weeks US Government rejects recovery plans from GM and Chrysler. Financials struggled on concerns that banks will need another capital injection. Realization that the recent bounce was good but the economy can’t recover overnight.

Oz Minerals (OZL) announces it has received an incomplete alternative bid from Minmetals that would result in them acquiring most of its assets apart from Prominent Hill mine. They say, “OZ Minerals has received an alternative incomplete proposal from Minmetals which, when completed, will result in Minmetals acquiring all of OZ Minerals’ assets except for Prominent Hill, Martabe and the company’s portfolio of listed assets. It also said it will make an announcement on refinancing negotiations before the start of trading tomorrow and will try to make a definitive announcement the new Minmetals deal. OZL still in a trading halt.

The market is surprisingly doing OK – down only 22 compared to the 57 point fall the SFE futures predicted this morning following heavy falls on Wall Street overnight. It seems we soaked up most of the damage yesterday. Aussie banks doing well despite their US counterparts getting smashed overnight, Resources down. Except gold stocks.

Tricom Today ASX Stock Market Report 30-3-09

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The SFE Futures suggested a 37 point fall in the market. BHP and RIO mixed Friday in ADR form – BHP down 5.15% and RIO up 1.38%. (BHP closed at the equivalent of 3333c, down 68c on Friday’s close.) Metals mostly down Friday - Copper down 0.86%, Zinc up 0.15% and Aluminium down 1.59%. Nickel down 0.26%. Oil price down 2.7% to $52.41. Gold down $16.80 to $923.20. Bonds unchanged with the 10 year yield at 2.7607%. A$/US$ down 0.04% to 68.96c.

No major news or announcements Friday. Stocks up 6.2% for the week. Widespread weakness. Financials up 12.2% for the week. Commodity stocks down on lower oil and metal prices. May oil futures down 3.6%. Material and energy stocks down 2-3%.General Motors up whilst announcing they are offering union members $10bn in preferred stock with a 9% coupon and $10bn in cash amortized over 20 years.IBM posts a gain. February personal income and spending in-line. Real personal consumption down.

The market is down 51 underperforming the 37 point fall predicted by the SFE Futures this morning. All sectors are down. Resources fairing the worst. BHP down 3.2%. RIO is the sole hero holding the market up a few index points. Banks down – only WBC up 0.7%.

Tricom Today Australian Stock Market Report 27-3-09

The SFE Futures suggested a 44 point rise in the market.BHP and RIO both up in ADR form overnight – 5.05% and 8.35% respectively. (BHP closed at the equivalent of 3451c, up 73c on yesterday’s close.) Metals up overnight – Copper up 3.03%, Zinc 3.85% and Aluminium 1.83%. Nickel 1.30%. Oil price up 3.1% to $53.87 whilst analysts fail to be able to explain why oil prices are rising against economic data showing the US economy is shrinking and oil inventories are bloated. Gold down $4.20 to $940. Bonds up with the 10 year yield down to 2.7417%. A$/US$ up 0.61% to 70.19c. Financials up 1% – lagged the entire session. The Obama Administration announced their plans for rewriting the financial rules governing Wall Street – the plan is to set up a single regulator who can monitor and intervene in any large firm whose failure could threaten financial stability across the economic system. The outline of the plan also highlighted tightening rules for hedge funds and private equity firms. Technology stocks up 4% – one of the strongest risers overnight – the large caps and the NASDAQ outperformed. The government’s 7-treasury note auction received stronger demand than yesterday’s 5-year note sale. Some of the fears around the government’s cost of capital and investor risk appetites were allayed. Retailers up 4.4%. Best Buy, ConAgra, Dr Pepper Snapple Group – all beat analyst’s expectations. Discretionary stocks up 4.0%. The market is having another good day – up 53 – much in line with the 44 point rise suggested by the futures this morning. The ASX 200 is now up 16.8% from its low of 3120 registered on Tuesday 10th March.

Tricom Today Australian Stock Market Report 26-3-09

The SFE Futures suggested a 15 point rise in the market. BHP up 1.36% in ADR form and RIO down 1.16%. (BHP closed at the equivalent of 3306c, down 20c on yesterday’s close.) Metals mixed overnight – Copper down 0.25%, Zinc down 1.54% and Aluminium up 0.35%. Nickel down 1.54%. Oil price down 2.1% to $52.24. Gold up $12.00 to $935.80. Bonds down with the 10 year yield up to 3.3%. A$/US$ up 0.29% to 69.755c. Financials closed up 4.6% – up 6.5% at best and down 2.5% at worst – there were some fears over the weak demand for the auction of $34bn in government 5-year treasuries to raise funds as part of the economic rescue program. The demand for $40bn in 2-year treasuries yesterday was much stronger. The main concern, is that the weak demand for government debt and the fears it raises, reminds investors just how reliant on the government’s bailout the economy and financial institutions are. Bank of America up 6.65% on comments it would repay government debt soon. IBM was slated in The Wall Street Journal that it would cut jobs.

Energy stocks down on the lower oil price. February’s durable goods orders for airplanes, cars, appliances, furniture and other significant goods, was up 3.4% – far better than the 2% drop expected – and the biggest jump up in 14 months. Durable goods had drop consecutively for the last 6 months. February new home sales rose 4.7% to an annualized 337,000 – but still the worst month on record since 1963.

The market is up 23 slightly better than the 15 point gain the SFE Futures predicted this morning. Gold and Healthcare stocks going along nicely. Quiet day on the news front. Seems as if the market is taking a bit of a breather after the recent rally.

Tricom Today ASX Stock Market Report 25-3-09

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The SFE Futures suggested a 25 point fall in the market. BHP and RIO both down in ADR form overnight – 5.37% and 2.10% respectively.(BHP closed at the equivalent of 3273c, down 109c on yesterday’s close.) Metals all down overnight Copper down 2.09%, Zinc down 1.39% and Aluminium down 2.28%. Nickel down 1.02%. Oil price up 0.6% to $53.36. Gold down $29.00 to $923.50. Bonds down slightly with the 10 year yield up to 2.7073%. A$/US$ flat overnight at 69.55c. Financials down 6.5% – Citigroup down 3.5%, Bank of America down 7.2%. JP Morgan down 8.6%. The economy still has problems with excessive debt – The unemployment rate sits at 8.1% – the highest level since the early 1980’s, House prices continue to fall. consumers refuse to spend and credit markets remain tight.

Treasury’s Geithner asked Congress to provide him with the power to safely dismantle large financial companies that pose a major risk to the economy. The SEC are still considering the modification to the “uptick rule” with regard to shortselling stock, with pressure from exchanges like the NYSE and the NASDAQ for changes to be made. Energy stocks down 2.2% despite a rebound in crude oil futures.Tech stocks down 1.6%. Some of the large names fell harder – Microsoft and Intel both down over 2.5%. The market is up 29 outperforming the 25 point fall predicted by the SFE Futures this morning. BHP and RIO down 1.9% and 0.5%. Financials and property both up – banks all up despite US financials down 6.5% – NAB outperforming – up 4.4%. Macquarie Group down 1.8% today – A couple of brokers suggest it has done its dash – Both Royal Bank of Scotland and Citi cut their recommendation to Hold from Buy due to its recent outperformance. The stock is up 47% so far this month.

Tricom Today ASX Stock Market Report 24-3-09

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The SFE Futures suggested an 88 point rise in the market.BHP and RIO both up in ADR form overnight – 8.07% and 16.38% respectively. (BHP closed at the equivalent of 3409c, up 76c on yesterday’s close.) Metals mixed overnight – Copper up 2.65%, Zinc up 2.62% and Aluminium down 0.96%. Nickel down 1.25%. Oil price up 2.9% to $53.05.
Gold down $3.70 to $952.50. Bonds down with the 10 year yield up to %2.6595. A$/US$ up 2.24% to 70.54. Citigroup up 19.5%. JP Morgan up 25% and the Bank of America up 26%. Bill Gross from Pimco said that the world’s largest bond fund will take part in the program. Diversified Financials up 24.5%. Diversified banks up 22.3%. Energy sector up 7.8%- May crude oil futures were up 3.5%. Defensive sectors up less on a relative basis. Homebuilders up strong on the positive home sales report – Toll Brothers up 10.8% and KBR Inc up 5.7%. The market is up 52 after being up 96 earlier in line the 88 point rise predicted by the SFE Futures this morning. Financials and property leading the way as the US government unveil their US$1 trillion public-private partnership bank plan. All the banks up but coming off morning highs – CBA outperforming.

Tricom Today ASX Stock Market Report 23-3-09

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The SFE Futures suggested a 20 point fall in the market. BHP and RIO both down in ADR form Friday – 1.29% and 0.18% respectively. (BHP closed at the equivalent of 3224c, up 6c on Friday’s close.)Metals down Friday – Copper down 1.10%, Zinc 0.32% and Aluminium 0.27%. Nickel down 0.30%. Oil price up 0.20% to $51.55 on a quite day in the energy sector after oil’s best weekly run in a month. Gold down $2.60 to $956.20. Bonds up slightly with the 10 year yield down to 2.6309%. A$/US$ up 0.49% to 68.99c. Industrials down 3.3% – General Electric down despite positive broker comments about their capital position and liquidity. Defensive stocks outperformed – up 0.1%. Healthcare up 0.2%Defensives have been the worst performers over the last couple of weeks during the rally. Financials down 5.3% – still up 40% since March 6th – Treasury’s Geithner is expected to announce Monday the details of the government’s $1 trillion package to buy troubled securities from the balance sheets of major banks utilizing the new government entity – the Public Investment Corp – using the resources of the $700bn bank bailout fund announced on February 10. The market has started the week off in a positive mood 0- up 43 – despite the SFE Futures suggesting a 20 point fall this morning and the 122 point fall in the US on Friday. Financials, Property Trusts and Resources are maintaining their recent good form.

Tricom Today Australian Stock Market Report 20-3-09

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The SFE Futures suggested a 13 point rise in the market. BHP and RIO both up in ADR form overnight – 5.23% and 3.93% respectively. (BHP closed at the equivalent of 3287c, up 162c on yesterday’s close.) Metals up overnight – Copper up 6.47%, Zinc up 6.22% and Aluminium up 6.09%. Nickel up 1.32%. Oil price up 6.9% to $51.46 on a lower US$ against other currencies as the Fed announced their potential inflation inducing $1 trillion capital injection into the financial system. Gold up $69.70 to $958.80. Bonds down slightly with the 10 year yield up to 2.6086%. A$/US$ up slightly to 68.51c. CRB Commodity index up 5%. The weaker US$ was underpinning the strong performance across commodities. The US$ was down 1.7% last night and down over 4% over the last two sessions. Material stocks up 1.4% on the higher metal prices. General Electric up on reaffirming positive profit guidance for 1Q and FY. Fed Ex posted 3Q NPAT down 75% – plans to cut more jobs and cut costs. Oracle and Nike beat quarterly expectations. The market is down 3 after being up 19 points earlier in line with the 13 point rise predicted by the SFE Futures this morning. Financials down, Resources up on higher metals and commodity prices. US$ down – Aussie dollar up. Financials taking a breather today – down 2.2% – after consecutive days of gains, not helped by US Financials which went backwards overnight.

Tricom Today ASX Stock Market Report 19-3-09

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The SFE Futures suggested a 31 point rise in the market.BHP and RIO mixed in ADR form overnight – BHP up 2.15% and RIO down 2.3%.(BHP closed at the equivalent of 3166c, up 58c on yesterday’s close.)Metals mostly down overnight – Copper down 1.16%, Zinc down 3.64% and Aluminium up 0.44%. Nickel down 2.23%. Oil price down 1.7% to $48.12 on a government report showing a bigger-thanexpected inventory increase in the US. Gold down $27.70 to $889.10, but rallied after hours $50+. Bonds up with the 10 year yield down to 2.5419%. A$/US$ up 2.21% to 67.66c. Material and energy stocks finished higher despite the fall in oil and metals overnight. Technology stocks up on the news IBM is in takeover talks with Sun Microsystems – reports of at least $6.5bn in cash for the deal are being bandied around. Oracle announced positive results after the close. Financials up 10.1% on the announcements from the Fed regarding their plans to further stimulate the economy, increasing the flow of credit and creating demand for assets. Diversified financials services companies up 13.2%. Diversified banks up 14.9%. Our market is having a good day – up 20 – up 54 at best and in line with the 31 point rise predicted by the SFE Futures this morning. Most sectors up – only healthcare and telecom stocks down. Financials, Resources and Industrials outperforming.

Tricom Today ASX Stock Market Report 17-3-09

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The SFE Futures suggested an 8 point rise in the market.
BHP and RIO both down in ADR form overnight – 1.10% and 1.36% respectively.(BHP closed at the equivalent of 3128c, up 28c on yesterday’s close.) Metals up overnight – Copper up 4.36%, Zinc 2.21% and Aluminium 0.82%. Nickel up 5.16%. Oil price up 2.4% to $47.33 – OPEC hinted that itsmembers might cut production as its next meeting. Gold down $8.10 to $922. Bonds down with the 10 year yield up to %2.9557. A$/US$ up 0.72% to 65.95c. Financials down 1.9% after being up 6% early in the session. Citigroup up 31%, Bank of America up 7.3% and AIG up 66%. Obama also laid out more details on the plan to assist small businesses including a $15bn injection into the secondary credit markets to reduce lending fees, increase loan guarantees and ease the tax burden. Obama said he’d pursue every legal channel to ensure the executives at AIG don’t get paid the $450m in bonuses when AIG has already received $170bn from the American taxpayers. He said it was an issue of “fundamental values”. The FASB (accounting board) proposed changes to legislation that would allow companies more discretion in determining the definition of “distressed markets” for accounting purposes which would potentially allow a relaxation of the mark-tomarket
write downs on troubled assets across their balance sheets. The market is up 49 outperforming the 8 point rise predicted by the SFE Futures this morning. All sectors up bar telecoms. Industrials and resources outperforming. Property stocks continue to recover. BHP and RIO both up – RIO says in its financial statement summary that it’s ahead on delivering Alcan synergies. Banks all up today with Westpac outperforming – up 1.8%.

Tricom Today Australian Stock Report 13-3-09

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The SFE Futures suggested a 58 point rise in the market. BHP and RIO both up in ADR form overnight – 0.22% and 3.48% respectively. (BHP closed at the equivalent of 3108c, up 73c on yesterday’s close.) Metals mostly down overnight – Copper down 0.25%, Zinc down 1.13% and Nickel 3.5%. Aluminium up 0.07%. Oil price up 10.5% to $46.91 following the better-than-expected US February retail sales figures. OPEC meet this weekend to discuss production. Gold up $13.30 to $924.00. Bonds up with the 10 year yield down to 2.8544%. A$/US$ up 0.27c to 65.47c. Biggest 3-day rally since November – up nearly 11% week-to-date. Financials lead the way. Oil has a 10% bounce. The FASB told Congress it may recommend a suspension of “mark-to-market” rules. Bank of America said they were profitable in the first 2 months of the year. Retail numbers better-than-expected. Initial jobless claims worse-than-expected. Business inventories down 1.1% in-line with expectations. General Electric’s credit rating cut less-than-expected – only to AA. General Motors said it wouldn’t need the previously requested $2bn from the government. The market is up 106 outperforming the 58 point rise predicted by the SFE Futures this morning. All sectors enjoying the bounce, particularly property (still recovering) and energy after the 10% bounce in the oil price overnight.

Tricom Today Australian Stock Market Report 12-03-09

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The SFE Futures suggested a 21 point rise in the market. BHP and RIO both up in ADR form overnight – 1.93% and 4.54% respectively. Metals mainly down overnight – Copper down 3.52%, Zinc down and Nickel 1.36%.Aluminium up 1.29%. Oil price down 7.1% to $42.46 on US inventories rising unexpectedly by 700,000 barrels for the week ending March 6Gold up $14.80 to $910.70. Bonds up with the 10 year yield down to 2.9057%. A$/US$ up 0.6c to 65.19c. Financials down 2.4% – Freddie Mac is asking the government for another $30.8bn to stay afloat after posting a $50bn loss last year due to falling home prices. Citigroup up 6.2%, JP Morgan up 4.6%. The congressional committee will meet tomorrow to address the “mark-to-market” accounting rules which are ensuring the banks make massive writedowns. A temporary suspension of the practice could lead to a short-term rally in the banks. A CNBC report said JP Morgan Chase was profitable in the first two months of the year. Healthcare stocks down 2.0% – Pfizer had its credit rating cut by Moody’s to Aa2 from Aa1. Energy stocks down 1.2% thanks to the struggling oil price. The market is up 4 – up 28 early at its high. The SFE Futures predicted a 21 point gain this morning. Resources and property trusts outperforming. Unemployment figures have come out better-than-expected but have failed to inspire the market. They make a rate cut less likely next month.

Tricom Today Australian Stock Market Report 10-3-09

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The SFE Futures suggested a 15 point fall in the market. BHP and RIO both down in ADR form overnight – 2.1% and 6.1% respectively. Metals down overnight - Copper down 2.93%, Zinc 0.41% and Aluminium 0.84%. Nickel down 1.78%. Oil price up 3.5% to $47.01 – its highest level in two months.Gold down $24.70 to $918.00. Bonds unchanged at 2.8571%. A$/US$ relatively unchanged at 63.17c. Financials up 2.5% after being as low as negative 2.2% and as high as positive 5.3% – got a lift from news that Bank of America could raise capital in the private markets. Warren Buffett said the economy had “fallen off a cliff”. He was more positive about the long term prospects for the US economy. He said that consumers had already started to change their habits in fundamental ways. He also said Wells Fargo – in which he has holdings – will exit the downturn with stronger earnings power than previously. Ford Motors’ union have agreed to freezing wages and reducing benefits as measures designed to assist the flailing car manufacturer. Material stocks down 1.1%. Energy sector was the only other sector making gains – up 0.5% thanks mainly to the jump in the oil price. Nouriel Roubini, a professor at New York University who predicted the financial crisis, says the US is in the 15th month of recession and that unemployment in the US will hit 10% and growth zero next year – said “most of the U.S. financial institutions are entirely insolvent”.