Monday, March 03, 2008

US market in bad shape

KLCI ended down 2% at 1330.61 in thin volume, off intraday low of 1329.17, led by declines across all sectors with decliners trouncing gainers 587 to 171; Falls in regional markets and drop in U.S. market Friday exerted selling pressure domestically. Volatile trade expected to persist tomorrow with benchmark index tipped to trade in 1320-1338 (neckline of bearish Head & Shoulder formation). The market is not stable. Any rebound is a selling opportunity. It's difficult for local funds to defend this kind of market with regional selling pressure. The U.S. economy is in bad shape. We are likely to see big drops in the market with the U.S. economy possibly slipping into a recession.

Oil Record High US$103
Crude oil futures have topped the inflation-adjusted high set in April 1980, as the U.S. dollar's descent continues to send investors into the commodities markets. Light, sweet crude for April delivery traded as high as $103.95 a barrel on the New York Mercantile Exchange, topping a 1980 trade of $103.76 in 2008 dollars. The April contract recently traded at $103.59. Brent crude on the ICE futures exchange was trading up $1.72 at $101.82. The 1980 record predates the creation of the crude futures market on Nymex, and represents a deal on the cash market. Oil began to take off Monday morning after the U.S. dollar fell from a stable position overnight against the euro. Shortly after 9 a.m. EST, the dollar hit a new low, and oil began to rise rapidly. A fresh record for crude in real dollars came minutes later, and deals above the 1980 high were completed at about 9:55 a.m. EST. The dollar's decline makes Nymex futures, priced in U.S. currency, appear relatively cheap. The U.S. Commodity Futures Trading Commission reported Friday that net long positions in Nymex crude futures held by large speculators hit a seven-week high last week. After hitting the inflation-adjusted record, futures traded slightly lower, as new data showed the U.S. economy in worse shape than expected. Spending on construction in the U.S. fell by 1.7% in January, the fourth drop in a row. The U.S. manufacturing sector also shrank in February, the Institute for Supply Management reported. - Dow Jones Newswires


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