Markets Seeing Short Respite |
Yesterday, gold demonstrated its biggest intraday fall since 2008. Treasury obligations also fell while stocks in New York rose after publication of data on durable goods and real estate prices.
Gold futures fell 5.5% to $1,758.90 per ounce after the close of trading at 4:38PM in New York. Recall that gold prices recently exceeded the $1,900 barrier for the first time ever. The Standard & Poors 500 Index increased 1.3% to 1,177.60, supporting a steep increase of 3.4% from yesterday. Yields on 10-year American treasury notes fell by 14 basis points to 2.30%.
DT Trading analysts observed that stocks yesterday both rose and fell. For example, the S&P 500 Index fell by 0.5% and then wrung itself out, swinging more than usual within the bounds of the so-called technical level, since investors are waiting for Federal Reserve Chairman Ben Bernanke’s speech on August 26 at Jackson Hole, Wyoming. Gold prices dropped back amid speculation on the stability of the financial markets.
Yesterday’s report on durable goods orders (goods with an asset life of at least three years) and real estate prices contrasted with this month’s data on unemployment, consumer confidence, and production, which all point to the US being on the verge of another recession. The S&P 500 lost 15% between April 29 and August 24 after the debates in Congress over how to reduce the budget deficit, which prompted S&P to strip the US of its top-tier, triple-A credit rating.
“Resistance came in pretty much where you would expect to see it, followed by a predictable pullback to last night’s close,” said Michael Shaoul, director of Marketfield Asset Managementin New York. His company manages $1 billion of capital. "The most likely outcome is still a retracement of the majority of yesterday's gains in the US, but if the S&P 500 could move back up above 1,170-1,175 again, maybe you'd get the shorts under some pressure."
On the currency market, the Euro lost 0.2% and rolled back to $1.4414. The American currency gained 0.4% against the Swiss franc. High-yielding currencies with high interest rates from such countries as New Zealand and South Africa went up, since American stocks sensitive to risk have again started to be in demand. The yen fell 0.4% against the dollar and by 0.3% against the Euro as the Japanese government continues to take measures to weaken the national currency. It will offer a $100 billion loan for financing the loans of the Japanese Bank of International Cooperation (JBIC), according to what Japanese Minister of Finance Yoshihiko Noda told reporters in Tokyo. As a creditor, JBIC is well-known as the government’s export credit agency. DT Trading Limited is assuming that such financing will be offered to the bank with 0% interest or a rate close to it since the return on loans in yen, given the currency’s steady growth, seems inevitable.
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