Wednesday, October 6, 2010

Dow Jones Industrial Average Review, 06/10/2010

Dow surges 194 points to a 5-month high record. The Dow Jones surged as much as 214 points intraday before closing 194 points higher at 10945, following strong September ISM non-manufacturing index of 53.2 (consensus: 52.3; August: 51.5), a hopeful sign for the largest area of the economy and the main source of employment.

Meanwhile, sentiment was also boosted by a surprise move by Japan's central bank to lower its key interest rate to between 0% and 0.1% and its pledge of a more quantitative easing (QE) measure to purchase about US$60bn of government bonds and other assets to stimulate its economy. Please refer to separate report today for our comments on this news.

The dollar fell to a six-month low against the euro at 1.384 and lost ground against the Japanese yen at 83.2. Investors shed defensive assets and commodities rallied with crude-oil futures closing at a five-month high, rising 1.4% to US$83/barrel, while gold futures ended at yet another record high of US$1,340/ounce.

Daily Dow Jones shows that the near term outlook is boosted by the better than-expected non ISM manufacturing numbers coupled with more quantitative easing (QEs) by FED to stimulate the economy. Should the highly focused September non-farm payrolls report (October 8), as well as the forthcoming 3Q10 earnings season do not fail market expectations, we may see a resumption of further rally to retest its 52-week high of 11309. Supports are situated at 10500-10600 points.

Daily Dow Jones Shows possible resumption of uptrend to retest 52 week high of 11309 amid overnight surge.

Daily Dow Jones Versus US 10 Years Treasury Yield chart shows that more upside bias amid another round of quantitative easing (QEs) Measures.
DowJones Vs US 10 Years Treasury Yield
Source: MarketWatch

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