Market wrap: US stocks closed mixed overnight but well off their lows as General Motors lurched nearer to bankruptcy. The Dow added 0.6% despite a 20% slump in GM stock to 1933 levels after news that key executives sold all their shares on Monday. The broader S&P 500 was near flat at -0.1% and the Nasdaq lost nearly 1%.
The main US banking index was down nearly 4%. Gold miners fronted gains after the price of gold broke to its highest level since March. Weakness in the US dollar saw gold recently trading more than 1% ahead at $923.30. Oilers were also ahead after the price of crude oil added 0.6% to $58.81 to cling near six-month highs. Base metals advanced in early trading but most were unable to hold onto gains, closing near flat.
Futures traders think there are enough positives there for our market to squeeze out its first positive day this week, but it's not a very convincing lead. The SPI closed 11 points ahead at 3880.
We might see a rotation into gold this week as the US$ comes under pressure and traders question whether the two-month rally in equities has much further to run. After basing in April, the trend in the p.o.g. for the last month has been steadily higher.
Still a time to be cautious IMO. My rotation into defensive shares paid off yesterday with three out of four advancing against the overall trend. Looking for further gains today in MTS, BBG and GMG.
