Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Australian shares are primed to open at a five-week high following strong gains on Wall Street after the Federal Reserve reassured investors it is in no hurry to raise rates.
The December SPI200 futures contract rose 62 points or 1.2% to 5256 as the S&P 500 closed above 2000 for the first time in three weeks and crude oil hit a three-month peak above US$50 a barrel. BHP and Rio Tinto marked new multi-week milestones as the US materials and energy sectors rose for an eighth session.
US stocks were underwater for much of the session before the release of the minutes from the September Fed policy meeting triggered an afternoon rally. The S&P 500 surged 18 points or 0.88%, closing above the September 17 'dead cat bounce' high, after the Fed reaffirmed its faith in strength of the American economy even as the overseas outlook dimmed. The Dow rallied 138 points or 0.82%. The Nasdaq was once again held back by weakness in biotechs, gaining 20 points or 0.41%.
The September minutes showed the Fed believed the domestic economy was continuing to improve but it would be "prudent" to wait for confirmation that external events were not having a negative impact. Officials were concerned that a slowdown in China and a surging greenback would undermine exports and place further downward pressure on inflation.
Read more here.
"The fact they spoke about inflation basically tells me they're not going to raise rates in December," Peter Cardillo, chief market economist at Rockwell Global Capital in the US, told
CNBC. "I think the combination of oil and the Fed minutes have lifted the indices here."
Energy and materials continued to lead the market, rising for an eighth straight night. The US energy ETF rallied 1.94% as crude oil pushed briefly above US$50 a barrel. West Texas Intermediate crude oil for November delivery settled 3.4% ahead at US$49.43 a barrel before rising as high as US$50.07 as the Fed minutes helped push the US dollar lower. Analysts attributed the advance in crude partly to solid gains on the Shanghai Composite yesterday, which resumed trade after a week-long holiday with a rise of 2.97%. Russia's intervention in Syria injected a level of geopolitical risk.
"The situation is getting complicated very quickly and raising the geopolitical risk in the region to a new high," Energy Management Institute analyst Dominick Chirichella told
CNBC. "This has caught the attention of the marketplace [and] is viewed as a situation that could potentially impact the flow of oil from the region as well as degrading the already declining relationship between Russia and the US."
BHP surged 4.63% to its highest point in almost two months in US trade. Rio Tinto added 1.62%, also near a two-month peak. Spot iron ore for import to China improved 40 cents for a second straight day to US$54.80 a dry ton.
Apple and the iShares Nasdaq Biotechnology Index were the biggest drags on the market, falling 1.16% and 0.19%, respectively. The Dow Jones Transportation Average rallied 1.38%.
A light night for economic data included news that first-time claims for unemployment benefits declined by 13,000 last week to 263,000, the lowest level since mid-July and second-lowest reading in 42 years.
Read more here.
The NYSE Arca Gold Bugs index fell 0.55% as a brief post-Fed minutes rally in gold faded. Gold for December delivery settled $4.40 or 0.4% lower at US$1,144.30 an ounce before the minutes and was lately trading at US$1,142.70 after temporarily breaking through the US$1,150 level.
Copper pared recent gains after weak German export data resurrected concerns about faltering Chinese demand. London copper lost 1% after data overnight showed German exports suffered their biggest slump since the GFC during August. London aluminium shed 1%, lead 0.1%, tin 0.8% and zinc 1.5%. Nickel improved 0.1%. US copper for December delivery was recently off 0.6% at US$2.35 a pound.
European markets eked out slim gains amid hopes that soft German trade data will force further stimulus measures from the European Central Bank. The Stoxx Europe 600 inched up 0.19%, Germany's DAX 0.23%, France's CAC 0.18% and Britain's FTSE 0.61%.
The dollar was this morning buying 72.61 US cents.
TRADING THEMES TODAY
HEALING CONTINUES: It has been virtually all good news this week as the repair work continues on global markets. Wall Street closed above the closing high of the failed September rebound, which increases the chance that we are seeing a W-shaped rebound there. The ASX 200 has rallied on six of the last seven sessions and looks like securing a seventh win today. The 50-day moving average appeared to offer resistance yesterday, with the index poking its head through, but closing below. Mild disappointment over China's share performance was the trigger for the pullback. However, out futures suggest we should breeze through today with the big miners again providing the momentum. Two possible flies in the ointment: Alcoa released earnings following the close of regular US trade this morning and shares are currently down 4% as I prepare to post; the Shanghai Composite needs another good session today to settle nerves about recent ructions over there.
ECONOMIC NEWS: August home loans figures are due at 11.30am EST. Alcoa's earnings report is likely to be tonight's main interest in the US. Also due: import prices, wholesale inventories and speeches by two Fed officials.
Good luck to all.
