The fate of Lehman Bros will drive the market: and then could it be the fate of someone else?
The domino theory of US financial groups seems to be alive and threatening Wall Street.
Fundamentals matter for naught at the moment, though the rebound in commodity prices on Friday night will help sentiment here today, so long as there’s no bad news from hurricane Ike or Lehman Bros to overshadow trading.
As well, the possible merger between Bank of America and Merrill Lynch and the recapitalisation of American Insurance Group may take some of the nervousness out of the markets, if traders are assured tyhe deals are solid and done.
Wall Street was hesitant Friday because of the Lehman crisis; the Standard & Poor’s 500 rose 2.65 points, or 0.2%, to 1,251.7; the Dow fell 11.72, or 0.1%, to 11,421.99 and Nasdaq rose 3.05 points to 2,261.27.
The plan by AIG to announce its revamp later today could help settle nerves, especially if the Lehman situation remains uncertain.
The S&P 500 posted its first weekly advance in a month, rising 0.8%. The Dow rose 1.8% rose and Nasdaq gained 0.2%.
But our market was up 50 points, or about 1% higher on the overnight futures market on Saturday morning.
That will be influenced by the outcome of the Lehman rescue.
The bump up in copper and gold helped BHP Billiton and the shares jumped 7.4% in London, after a solid rise on Friday in Australia.
European shares rose Friday for the first time in four days.
European banks rose, led by UBS and Barclays which is said to be sniffing around Lehman.
The Dow Jones Stoxx 600 Index rose 1.7% on Friday to end up 3% over the week.
Markets rose in 18 major western European countries, except Greece and Iceland. Germany’s DAX climbed 0.9%, while the London’s FTSE 100 jumped 1.9% and France’s CAC 40 advanced a solid 2%.
Asian shares however fell for a second week, but that was more down to being out of the timing loop so far as the Lehman Bros rescue is concerned and the impact of Hurricane Ike in the Gulf later on Friday.
The MSCI Asia Pacific Index dropped 0.6%, a second straight weekly decline. It’s still down 26% so far this year.
Japan’s Nikkei was all but unchanged for the week, while Hong Kong’s Hang Seng Index slid 2.9% and the ASX 200 rose 1.9%.
The All Ordinaries gained 85.60 points, or 1.8%, to 4,957.10.
BHP rose $1.53, or 4.4%, to $36 and Rio Tinto jumped $4.70, or 4.6%, to $106.25.
Financial stocks rose with Macquarie Group up $2, or 4.8%, to $44.01.
The Commonwealth Bank finished up 99c, or 2.4%, to $42.99.
Centro Properties was the second worst performer, down half a cent to a record low 10.5c.
That was a fall of more than 32%. Centro Retail, the associated trust, shed more than 39% to 15c after the group failed to sell Bankstown Square in Southwest Sydney.
Centro’s fall in value is also bad news for some unlisted trusts holdings investments in Centro Retail.
Allco Finance fell 23.6% to 21c. It was a miserable week for the imploding rump of the group.
