Dow Jones was up 420. It closed right on its peak and up 286 points before the Fed announcement on good results from Goldman Sachs and Lehman Bros with the Fed decision a bit of a side issue. The Dow dropped 100 points on the Fed announcement on disappointment that they only cut rates by 75bp instead of 100bp…..then it rallied another 286 points.
Financials had their biggest gain in 8 years up 8.5% bouncing off a 5 year low. Homebuilders helped lead the rally after better than expected Housing Starts numbers and Homebuilders helped lead the rally after better than expected Housing Starts numbers. Goldman Sachs up 16% on results (fell 3.7% yesterday). Q1 earnings down 53% to 323c a share against forecasts of 259c. Goldmans CEO said about Lehman Bros that they are "totally confident' in Lehman's ability to weather the current financial crisis" and Lehman Bros up 46% on results (it fell 19% yesterday). Q1 net income down 57% to 81c against forecasts of 72c. They took a $1.8bn mortgage related write-down. Equities revenue up 6%.
On the back of the Fed decision and their commitment to extend their position as lender of last resort Goldman Sachs JB Were in their Australian research this morning say "the negative sentiment towards the domestic financials will reverse heading into their May reporting period. We have therefore decided to reverse our underweight Bank position in the model portfolio".
Both BHP and RIO up in ADR form overnight, 2.83% and 6% respectively. BHP up 98c to 3668c.
Metals all up overnight – Copper up 2%, Nickel up 2.3% and Zinc 1.7%. Aluminium up 1.6%. Zinifex up 48c to 997c.
Oil price up $3.83 to $109.57 after the Federal Reserve cut interest rates by 75bps in a hope of stimulating the US economy. Woodside up 122c to 5490c.
Gold up $1.70. Newcrest down 122c to 3627c. Gold stocks have performed very well in the fall. Getting left behind in the rise. Bonds down with the 10 year yield up to 3.45% from 3.30%.
