NETQUOTE MORNING MARKET REPORT
(Oil is the September contract on the NY Mercantile Exchange (NYMEX). Gold is the December contract on the COMEX division of the NY Mercantile Exchange. Silver and Copper are the September contracts on NYMEX.)
NEW YORK - Stocks pared early losses and traded narrowly mixed Wednesday as a drop in oil prices helped restrain fresh worries about the financial sector.
Investors began the day fearing more industry-wide writedowns of bad home loans after mortgage financier Freddie Mac reported a larger than expected second-quarter loss.
But a reversal in oil prices, continuing a decline that propelled stocks sharply higher on Tuesday, helped calm investors about the forces tugging at the economy.
Freddie Mac, which substantially increased its reserves for souring loans, lost about three times Wall Street’s expectations on a per-share basis.
The company also announced that it expects to cut its third-quarter dividend as it seeks to preserve capital.
The well-being of Freddie Mac and sister company Fannie Mae is a big concern on Wall Street as the government-chartered companies hold or back nearly half of all US mortgage debt.
The Dow rose 40.3, or 0.35 per cent, to 11,656.07.
The Standard & Poor’s 500 index added 4.31, or 0.34 per cent, to 1,289.19, and the NASDAQ rose 28.54, or 1.21 per cent, to 2,378.37.
LONDON - Europe’s major bourses extended their rally, posting fresh gains thanks to positive trading in banking and mining shares.
In London, the FTSE 100 index climbed 31.6, or 0.58 per cent, to close at 5,486.10.
FRANKFURT - The Dax added 42.69, or 0.65 per cent, to 6,561.39.
PARIS - The CAC 40 rose 61.98, or 1.41 per cent, to 4,448.33.
TOKYO - Japan-based shares staged a powerful rally on Wednesday, snapping a three-day downturn as investors cheered a drop in crude prices, gains on Wall Street and a weaker yen.
Tokyo’s Nikkei 225 index rose 340.23 points, or 2.63 per cent, to end at 13,254.89.
HONG KONG - Hong Kong’s stock exchange was closed Wednesday due to a severe tropical storm sweeping the region.
On Tuesday, the blue-chip Hang Seng Index retreated 565.17 points, or 2.5 per cent, to 21,949.75.
WELLINGTON - The New Zealand sharemarket rose strongly as markets around the world posted healthy gains.
New Zealand’s NZSX 50 closed up 56.66 points, or 1.72 per cent, to 3,352.34.
SYDNEY - The Australian stock market is expected to open relatively flat today, but may rise slightly after oil continued to slide.
At 0750 AEST, the September share price index futures contract on the Sydney Futures exchange was 15 points higher at 4,986.
Today’s releases include the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index for July, and Australian Bureau of Statistics (ABS) labour force data for July.
Tabcorp Holdings Ltd releases its annual results.
The Australian share market gained more than three per cent yesterday, buoyed by a strong US lead and hopes of cuts to domestic interest rates.
The benchmark S&P/ASX200 index closed 148.7 points, or 3.08 per cent higher at 4969.1, while the broader All Ordinaries climbed 136.1 points, or 2.79 per cent to 5018.1.
NYMEX
Oil prices briefly dropped below $US118 a barrel on Wednesday - $US30 below their record high - after a jump in US crude and other fuel stockpiles fed beliefs that high energy prices are eating into demand.
Light sweet crude for September delivery finished the session down 59 cents at $US118.58 a barrel on the New York Mercantile Exchange.
It was crude’s lowest settlement price since May 2. Prices earlier fell as low as $117.11, an $US30 or 20 per cent drop from their trading high of $US147.27 reached on July 11.
Some investors believe a 20 per cent pullback signals a change in sentiment toward the oil price.
In London, September Brent crude fell 70 cents to settle at $117 a barrel.
Oil market traders are paying close attention to see if oil falls below $US117, a key resistance level expected to trigger a rash of technical selling by computers programmed to dump oil contracts once prices fall below a certain threshold.
Investors appear to be reacting less to potentially bullish factors like the weather and geopolitical developments and instead are turning their attention more to fundamentals.
In other Nymex trading, heating oil futures fell 4.41 cents to settle at $US3.2379 a gallon, while gasoline prices fell 0.71 cent to settle at $US2.9493 a gallon. Natural gas futures rose 4.7 cents to settle at $US8.773 per 1,000 cubic feet.
COMEX
Gold closed lower for a fourth straight session on Wednesday as another drop in crude prices coupled with a stronger dollar diminished the metal’s appeal as a safe-haven asset.
Gold has faced strong downward pressure in recent weeks - dropping five per cent in the past month, as dwindling demand for energy and a weakening US economy cuts into the price of crude and other commodities.
Gold for December delivery fell $US2.90 to settle at $US886.10 on the New York Mercantile Exchange, after earlier falling to $US880.50, the lowest level since June 16.
Other precious metals traded mixed. Silver for September delivery dropped 6.7 cents to settle at $US16.505 an ounce on the NYMEX.
September copper added just over half a cent to settle at $US3.4235 a pound.
Further weighing on prices, the US dollar has gained ground in recent days against the euro, encouraging selling by investors who bought precious metals to hedge against inflation and weakness in the US currency.
