每日市場點評 --- April 30, 2008

The market ended the Fed decision day modestly lower after gaining as much as 1.4% earlier. For the month, it gained more than 4%, the best since December 2003 and ending the longest losing streak since 1990. Most economic news for the day was positive. The first reading on Q1 GDP came at 0.6% vs. 0.5% expected. In other words, although it certainly feels the US economy is already in a recession and most likely it is, technically we are not there yet. The Chain Deflator reading, on the other hand, came below expectation and so did the Employment Cost Index. Both are good news for inflation outlook. There is also some good news on the employment front. The ADP Employment report, which was released two days ahead of the Nonfarm payroll report, came at 10K vs. -60K expected. But traditionally the ADP report doesn’t correlate very well with the non-farm payroll report, so any inference of a better reading on the latter should be contained.

Commodity stocks had a nice rebound following recent weakness. Transportations, technologies and financials were among the noticeable losers. Treasuries reversed early losses and closed higher. Apparently some investors were not convinced that the Fed had finished its rate-cut campaign, which added pressure to the US dollar. But the latest Fed statement did take out “downside risks to growth remain”, indicating the Fed is ready to keep rates steady for a while. So today’s sell-off in the US dollar may just be profit taking. One of the biggest gainers of the day came from Brazil following Standard&Poor’s granting the country debt investment grade for the first time. The yield on the 10 year Brazil Global Bond dropped 18 bps while the country’s stock market gained more than 6%, reaching a new historical high. Indeed, if one simply invested in the Brazil stock market during the past five years, the total gain (currency gain + capital gain) would come at 1000% compared to roughly 40% in the US. That is probably why investors are so attracted by the emerging markets these days.