A weekend G20 meeting in Shanghai ended with gubment bankers taking no concrete action to boost sagging global growth. Prior to the meeting, stocks had been on the rise in anticipation of some sort of action to address global financial issues but with little to show for all the effort investors sold Asian and European shares and the US followed suit. China did announce more stimulus measures but other areas of the globe are hurting as evidenced by the shares of British banking giant Barclay’s having fallen over 50% from last year’s highs with rumors now swirling that the bank is trying to sell its Africa division.
At the close the Dow fell 123 on light volume at 16,516. It was a bit of a whip saw day as the Dow had opened in the black but then went negative into the close. The Chicago PMI came in at 47.6, missing expectations and dropping from a reading of 55.6 in January. Pending home sales fell 2.5% in January versus expectations calling for a slight gain. The US economy continues to hold steady but all eyes are on global market stresses. After falling 5.5% in January the Dow gained 0.3% in February.
Gold today resumed its upside mojo gaining $19 an ounce to trade near $1,239. Year to date through the end of February gold is up 15% for its best performance in over 4 years. Gold could get a further boost if Europe announces more stimulus measures next week. Even Warren Buffett’s European insurance company is facing negative interest rates for its reserves which might affect premiums and earnings. Warren mentnioned that the money would be better off under a mattress…….a very big mattress.
Oil prices were higher today after China moved to boost its slowing economy and Saudi Arabia pledged to work with other crude producers to limit market volatility. WTI crude today gained 3.2% to close near $33.80 per barrel.