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The Dow Futures Report

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US Equities fall on swine flu concerns

Tue, Apr 28 2009, 06:22 GMT
by Paul Brittain

Alaron

US EQUITIES FALL ON SWINE FLU OUTBREAK CONCERNS, POTENTIAL THREAT TO TRAVEL AND TRADE. CONCERNS OVERSHADOW AGGRESSIVE COST CUTTING AT GENERAL MOTORS, HEALTH CARE GAINS.

US EQUITIES retreated, following in the path of Asian and European indices, on the concerns that the spreading of a new strain of swine flu could disrupt global travel and trade, offering another unforeseen stumbling block to cautious optimism regarding the global economy. The market received its apparent wish regarding issues to worry about, as the negative sentiment from the growing flu outbreak overshadowed better than expected earnings reports from the pharmaceutical sector, new costing cutting initiatives from General Motors, and a drop in the Libor rate to levels not seen since before Lehman Brothers. This last development seems to be offering an indication that elements of the credit freeze are beginning to thaw.

These bright spots were unable to overcome the gloom of the potential for forced restrictions of travel and trade derailing the fragile, initial signs of global economic stabilization. Until the uncertainty of a flu vaccine can be developed, the markets will likely continue to bear potential developments from this issue into future volatility. Tensions increased as the European Union and the United States both issued travel warnings to each other’s region unless absolutely necessary. In addition, Russia and China announced a cutoff of pork imports from region of the United States and Mexico, further pressuring the material and agricultural sectors.

While the markets were able to take focus from events beyond the financial sector for once, it offered little comfort. In the aftermarket, futures continued their retreat after the WHO (World Health Organization raised the pandemic alert from stage 4 from stage 3.

Technically, June Dow Futures appear to be getting somewhat top heavy and should setup for a pullback to the 7850 level. Resistance within this range remains set in at 8123. Additional support has set in at 7780.

Published on  Tue, Apr 28 2009, 06:26 GMT