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Tuesday, September 15, 2009

Markets Advance >>> Wall Street Shake Off US-China Trade Fears

Wall Street’s resiliency was on display again on Monday as the markets recovered from early losses and closed modestly higher despite concerns that a trade war would break out between the U.S. and China, hampering an economic recovery.

US stocks finished higher in calm trade overnight as the upbeat mood on economic recovery helped the market shrug off an escalating trade dispute.
Market action came as China filed a World Trade Organisation complaint over what it alleged were unfair tariffs imposed by Washington on Chinese tyre imports.

The move was in response to US President Barack Obama's decision Friday to impose punitive duties of 35 per cent on the Chinese imports, in the first trade sanction of his presidency against the country's second-largest trade partner.
"The prospects of a trade war with China has made traders considerably nervous," said Joseph Hargett at Schaeffer's Investment Research.
By the end of the day, the market recovered amid generally positive sentiment about the overall economic backdrop.

Today's Markets
The Dow Jones Industrial Average rose 21.39 points, or 0.22%, to 9626.80, the Standard & Poor's 500 gained 6.61 points, or 0.63%, to 1049.34 and the Nasdaq Composite climbed 10.88 points, or 0.52%, to 2091.78.

The mini rally on Wall Street coincided with the one-year anniversary of the implosion of Lehman Brothers, an event that helped send the markets plummeting to once-unthinkable levels. In contrast with the fear that dominated Wall Street last September, the markets mostly shrugged off talk on Monday of a potential trade war after the U.S. announced new tariffs on Chinese tires.
That resiliency came on the heels of the markets’ best week since late July and sent the S&P 500 and Nasdaq Composite to their highest levels since October and Sept. 2008 respectively.

“I think the Chinese story was digested like Chinese food is. It didn’t last very long,” commented NYSE trader Ben Willis of VDM Institutional Brokerage.
The markets were indeed spooked by the tariff news earlier in the day, sending the Dow down as much as 70 points within minutes of the start of the trading week. But the losses were fleeting, much to the bears' dismay.
"As expected, the ostrich market sticks its head in the sand. The market refuses to recognize any bad news,” said Joe Saluzzi, co-head of trading at Themis Trading. “It feels like a lack of sellers as opposed to any new buyers coming in.”
“There’s been a lot of worry about protectionism slowing global trade. Some of the news over the weekend solidifies that fear because the Chinese are talking about retaliating,” said Nick Kalivas, vice president of financial research at MF Global. “It creates a worry that it’s going to abort the economic recovery globally. It’s one more thing to worry about."

OIL FUTURES: Crude Drifts Lower On Oil, Fuel Surplus
Crude futures ended lower Monday as high global oil and fuel inventories kept buyers out of the market. Light, sweet crude for October delivery closed 43 cents, or 0.6%, lower, at $68.86 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 25 cents, or 0.4%, lower, at $67.44 a barrel.
Traders have settled on roughly $70 a barrel as the appropriate price for oil, which is available in massive quantities today but is expected to become more scarce as the world economy recovers and demands escalate. So when oil prices neared $73 a barrel on Friday, support gave way and futures quickly retreated.

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