Early Rally Fizzles Out

Early strength in the markets was partly due to easing concerns about the recent problems in the credit market, with news that Banc of America (BAC | Quote | Chart | News | PowerRating) has invested $2 billion in Countrywide Financial (CFC | Quote | Chart | News | PowerRating) generating some positive sentiment.

Buying interest waned not long after the open, however, as traders began to question recent optimism about the likelihood of an interest rate cut by the Federal Reserve in the near future. At the same time, selling pressure has remained relatively subdued.

Crude oil future prices for September rose by 0.6% to $69.70 a barrel, after hitting an 8-week low yesterday. Gold futures for December delivery rose 0.6% to $672.50 an ounce.

Around Asia, Shanghai's Composite added another 1% to finally crack the 5,000 mark to 5,032.49. Hong Kong's Hang Seng rose 2.8% to 22,966.97, and Tokyo's Nikkei gained 2.6% to 16,316.32.

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Darren Wong
Associate Editor
darrenw@tradingmarkets.com

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