Business News

Gaddafi shot, not!

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by Peter Switzer

Gaddafi was shot… NOT! Well, in fact, I don’t know but this was the rumour that was doing the rounds when I turned on the TV to check out Wall Street. Pentagon officials would not confirm the rumour but oil prices fell and the market started to head up.

At the close, the Nasdaq actually made it into positive territory! The more important S&P 500 index was down around 0.1 per cent, which was a fair effort.

It emphasises the importance of a quick solution to the Libyan standoff and how oil will respond. That said, President Obama went to great lengths overnight to hose down fears that oil will be at elevated levels for a long enough time to bring about a US economic downturn.

The focus goes back onto Muammar Gaddafi and, if he’s still alive, it must be a little unnerving to think that the investors of the world are sweating on his demise. And their preference is for a quick one at that.

Helping the market were explanations that oil countries actually have excess capacity and the likes of the US has emergency oil stockpiles that could ease pricing pressures.

Oil prices fell and stocks gained but also helping stocks is the better US economy. However, it still has a housing problem.

Bargain hunters were out in force on Wall Street overnight and I suspect we will see this play out on our local market today.

One thing that could hold us back is the fact that Rio and BHP headed south overnight in the US and this linked to a belief that metals and energy have decoupled on inflation concerns.

While locally we’re transfixed on our poor Kiwi cousins, global markets are locked on Libya and that will remain the story. That said, the underlying desire to buy stocks has not wilted to zero as this comeback in share prices on Wall Street proves.

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Published on: Friday, February 25, 2011