Hopefully it was goodbye to misery when October trading finished on Friday night and hullo some upside in November.
Hope is the key ingredient.
October will soon start looking more and more like the long sought ‘capitulation’ for the markets; unfortunately the usual rebound that will follow will be into a gathering recession that will not make life any easier.
In fact there’s a growing chance that the big theme around the world in 2009 will be what is still recalled with horror as a ‘grinding bear market’. That was last seen in the inflationary/stagflationary days of 1970s and early 1980s.
Inflation will not be a problem next year, a lack of economic growth will be.
In the US shares finished the month with a defiant rally, capping a strong week in a rotten month.
Global market were whacked: the MSCI all-country world stock index was down 21% last month, the largest monthly fall in its 20-year history.
Commodities were badly wounded: the Reuters-Jefferies CRB index, a benchmark for global commodities, fell more than 23% in October, its worst month on record. The next worst month was September, when it fell 11.8%.
The Dow lost 14.06% in October: its worst monthly percentage drop since August 1998. The Standard & Poor’s 500 Index fell 16.83%, the worst monthly loss since the great slump in October 1987.
Nasdaq shed 17.73%, its worst one-month percentage loss since the start of the net and tech collapse in February 2001.
The Dow finished the week though, 11.3%, its best weekly percentage gain since October 1974, the S&P 500 climbed 10.5%, its best weekly percentage gain since January 1980 and Nasdaq rose 10.9%, its best weekly percentage gain since April 2001.
For Australia it was a similar experience, but nowhere near as ‘down’ as the US (or some European and emerging markets for that matter) But last week wasn’t as solid here as it was on Wall Street.
The ASX 200 rose 3.8% last week, but lost 12.6% in October, the worst fall since 1992. The All Ords rose 3.94% last week, but fell 14%, the worst fall since October 1987 and the big slump (the All Ords fell 42% that month, which was a big ‘ouch’).
Stocks and bonds in emerging markets such as Brazil, Russia, India and China came close to posting record monthly losses last month.
Brazil and Russia lost around a quarter of their value last month, but Russia soared a huge 43% last week and Brazil around 17%.
The losses in the US and Australia were put in the shade by Tokyo’s Nikkei Index which shed an incredible 24%, the worst performance in its 58-year history. It rose 12% last week.
South Korea’s Kospi index rallied 18.6% last week and Hong Kong 10.7%.
In Europe, the FTSE Eurofirst 300 slid 13.1%, the most since September 2002. London’s FTSE100 lost 10.7% last month, which was better than the 13% loss for September.
Oil prices staged a late-session rally FriSo far this year, Americans have driven 5.6% less miles than they did in the same period of last year (To the end of September), according to Energy Department estimates.,
Gold has a bad day Friday to cap a miserable month as the supposed store of value in tough times lost credibility.
That was in part to the strong rally in the US dollar during the month, but also was due to selling by stretched speculators and others who wanted the security of cash in US dollars than the lure of a ‘store of value’ of in the metal.
December gold futures $US20.30, or 2.7%, to $US718.20 an ounce on Comex in New York.
That took the drop of October to 18%, the biggest since March 1980.
Comex December silver futures fell 5.5 cents to $9.73 an ounce. The metal fell 21% in October and is down 35 percent this year.
It was a similar story for copper on Friday: down and down.
Comex December copper futures fell 6.15 cents, or 3.3% to $US1.829 a pound to take the fall this year to 40%. It fell 36% last month alone!
While much of the price weakness was due to speculators and trade buyers quitting their positions and heading for cash, surging stocks of unsold metal also played a major part, as it indicates demand is slowing, especially in China.
Stockpiles monitored by the London Metal Exchange jumped 3% on Friday alone to 230,650 tonnes, the highest since March, 2004.
There are fears the recession in the US, Japan and Europe will be worse than thought.
That’s why commodity markets didn’t like Friday report from the Chicago-based Institute for Supply Management which said today its measure of business decreased in October by the most since the index started in 1968.
Citigroup has slashed its 2009 copper-price forecast by 45% to just $US2 a pound, compared with the old forecast of a (now) bullish looking $US3.65 a pound.
Wheat fell again on Friday as the surge in the value of the US dollar continues to put off buyers.
US sales to foreign buyers are down 29% from June 1, compared with the same period of 2007. Foreign purchases from June 1 are running at 18.9 million tonnes, compared with 26.6 million for the same period of last year, according to US Government figures on Friday.
Japan on Friday cancelled the planned purchase of 75,000 tonnes US wheat, instead buying 21,000 tonnes from Canada. Wheat prices are down 40% so this year.
December wheat futures dropped 3.25 cents to $US5.3475 a bushel on the Chicago Board of Trade on Friday.
The International grains Council now says it sees global wheat production rising to a record 683 million tonnes in the season ending June 2009, up 12% from the 2008 year.
The USDA h
