As investors search for reasons to rally, major markets continue to wallow in the slough of despond.
Last week was no different as the usual roll call of poor corporate, banking and economic news hit.
Commodities had a rally, again. China came and went as the ‘story’, leaving nothing but frustration behind.
The Dow rose 32 points on Friday night in the wake of the terrible February jobs figures: there was a sharp, later surge in share prices. In fact the Dow rose 150 points in the last 40 minutes of trading.
The S& P 500 added 0.1%, after being down 2.3% and looking for yet another 12 year closing low.
It was a rebound that came from nowhere (some blamed a rise in oil prices!).
For the week, the Dow lost 6.2%, matching its worst retreat since October, while the S&P 500 shed a nasty 7%, the biggest weekly fall in over three months.
GE slid 17% on concern losses are growing at its GE Finance business. It rose late Friday on broker claims it was over the worst.
Nasdaq composite fell 6.1% over the week as the tech sector reached a six year low.
In Europe, the FTSE Eurofirst 300 index fell 8% as it hit the lowest level in its 12-year history. The Dow Jones Stoxx 600 Index in Europe lost 7.8%.
In London the Footsie 100 had its fourth straight weekly drop amid continuing concerns for financial firms, dropping 7.8%.
After the close on Friday night, reports emerged that Lloyds Bank had done a deal with the UK government on taking over toxic loans in exchange for more help.
The Nikkei in Tokyo fell 5.2% – the biggest drop for six weeks – to sit close to a 26 year low. The Nikkei is down 19% so far this year as the country’s recession deepens weekly.
In China the Shanghai Composite added 5.3%, but fell 1.3% on Friday as investors adjusted to the lack of a new China stimulus story to drive sentiment.
The MSCI Asia Pacific Index lost 4.3% last week. It was the fourth weekly drop in a row, the longest fall since the bad days of last October after Lehman Brothers collapsed. The index is off 19% so far this year.
Australia’s ASX 200 Index dropped 6%; the All Ords was down 5.6% and Hong Kong’s Hang Seng index slumped 7%. (Funny how the China stimulus story doesn’t play all that well in Hong Kong.)
The ASX200 index closed 1.3% lower, or 43 points, on Friday at 3145.5, while the All Ordinaries index was down 1.2%, or 37.1 points, at 3111.7.
Overnight Friday, the SPI futures market closed with a small gain. The market should open flat today.
The AMP’s Dr Shane Oliver says the short term outlook for shares is very messy.
"More bad economic news is likely and from a technical perspective the fall below the 740 level for the US S&P 500 index has opened up the possibility of a further fall to around 640 to 670.
"This would translate to just below 3000 for the Australian share market.
"Against this, investor sentiment has fallen to extreme low levels which is positive from a contrarian perspective and the selling seems less manic compared to that seen last October/November with less stocks making new lows – both of which suggests we may be getting closer to at least seeing a meaningful rally in shares, particularly if the flow of news becomes a bit less bad.
"Despite the tenuous short-term outlook, we remain of the view that shares are attractive for long-term investors. Shares are offering yields (even allowing for falling dividends) much higher than those available on cash and bonds.
"Massive global fiscal and monetary easing is likely to result in a global economic recovery through 2010 and shares will lead this as they normally do.
"Finally, there is a significant amount of cash sitting in money market funds that will help fuel an eventual recovery in shares.
"In fact in the US there is enough cash sitting in money market funds to buy up to 47% of the US S&P 500 index."
