每日市场点评 --- March 28, 2008

All three major indices continued to slide for the third day in a row. The market started the week on a strong tone but finished the week with a loss of around 1%. Unless we get a strong Monday, the market is set to close lower for the fifth month and end the quarter with the steepest loss since 2002. Similar to yesterday, the economic news for the day was more or less matching expectation, but an analyst’s bearish comments for the financial sector along with a profit warning from JC Penny damped any hope of a positive close for the week.

Consumers held back their spending at a time that couldn’t be any worse. The Personal Spending for February rose 0.1% following a gain of 0.4% in January and the Personal Income increased 0.5%, better than expected. Although higher savings are beneficiary for the economy in the long run, the last thing economy needs right now is a further slowdown in consumption, which accounted for 70% of the GDP. In a separate report, the Core PCE, which is the Fed’s preferred inflation gauge, increased by 0.1% last month, bringing the y-o-y increase to 2%. Since the Fed has already raised its expectation for 2008 inflation to a range between 2% and 2.2%, today’s PCE results will certainly give the policy makers some comfort.

Financials and retailers were the biggest losers for the day. As we are approaching the end of the first quarter, it is difficult to read in too much of today’s action. It should be noted that many overseas markets are doing pretty well for the week. For example, the Nikkei 225 Average gained 4.6% and Hong Kong’s HangSeng index rose more than 10%. Will the recent underperformance of the US market compared with overseas markets become a trend? We probably need to wait a little longer before drawing a conclusion. The US dollar was again weakened against the euro and the yen. Interestingly, the CRB commodity index also dropped about 1.5% for the day. Treasury notes rallied today but for the week, they posted a loss. As for the coming week, we are going to get some important economic news and the market probably will face more tests going through the earning warning season.