Market Wrap - Week Ending Friday 4th Jan 08

By Jason Fittler

Welcome back, hope you had a great Christmas break and New Year. For those of us who stayed behind and kept an eye on the market it was a very quite time over the Christmas break but when everyone got back to work on the second we started to see some action.

The US concerns about the sub prime didn’t go away over the Christmas period with the US dropping 2% in the second day of trade in the New Year. We also saw Oil move above $100 US Barrel and the Aussie dollar gain some strength. Gold has taken off as investors ran for a safer investment as the US dollar started to fall. Base metals are starting to gain some ground but are still being held back over supply concerns as a number of new mines come on line.

2008 is shaping up to be another volatile year with investors picking up opportunities when they come their way. Daniel Goulding is bullish on the 2008 year as you will read in his current closing bell. The next few weeks should provide an opportunity for investors to get set and ready for another interesting year.

Let’s take a look at what happened last year.

Our market was up 16% for the year compared to the dow Jones 8%, FTSE up 7%, the big winner being the Shangni 136% and the big looser being the Nikkei down 11%.

Looking at individual stocks; BHP was up 54%, RIO 73%, WOW 54%, NAB down 2%, CBA up 22%, QBE up 26%, TLS 27%, ANZ down 3%, WBC up 12%, and WPL up 31%.

Breaking it down to the sectors; property was the big loser down 10%, energy up 30%, materials the winner up 42%, industrials up 7.5%, Financial up 4%, Utilities even, telecoms up 27%, tech stocks up 3%.

For 2008, there are a lot of mixed views in the market place as to which will be the winners and which will be the losers. Watch out for sub prime as this will hit the financials, infrastructure and property sectors as concerns grow over these sectors refinancing their debt. We should see this start playing out in February 2008 as a lot of the short term financing will be due then. Resources still look over bought but could still be in for a good bull year, we need to keep a close eye on the base metals prices and stock piles as a number of new mines come on line in 2008.

The Bond market could be a dark horse if in fact interest rates are cut further in the US, however this is a speculative play and not for the faith hatred. My tip, buy good quality blue stocks paying big fat dividends which look cheap due to market volatility and hold for the long term

Until next week.