Increased hopes for a pro-bailout government in Greece following weekend polling fuelled a rise in risk assets this morning, including Australian shares, oil, gold and US futures.
At lunchtime the ASX 200 was up 24 points or 0.6% at 4054 and on course for its first rally in four sessions. Traders rotated into cyclical sectors, sending metals & mining up 1.7%, energy 1% and financials 0.9%. The defensive telecoms, utilities and health sector were among the handful of sectors to decline.
The rally came after polling in Greece showed the pro-bailout New Democracy party with a 5.7% lead over the anti-austerity Syriza party. The poll result encouraged hopes that June 17 elections will deliver a working government in Greece that will honour the terms of an international bailout and keep the country within the euro-zone.
"Poll results in Greece have the potential to be the key driver of investor strategy over the next two weeks," CMC Markets analyst Ric Spooner told Fairfax. "If a realistic possibility of an effective pro-bailout government emerges, we are likely to see risk being re-priced and a rally in equity markets."
US futures rallied ahead of tonight's public holidays in Europe and the US. Dow futures were recently up 70 points or 0.6%.
Asian markets recently moderated after a mostly positive start. Japan's Nikkei and Hong Kong's Hang Seng both eased 0.02% and Shanghai dropped 0.66% after a Chinese government report showed profits at industrial companies declined last month as the economy continued to slow.
Crude oil futures bounced 90 cents this morning to US$91.69 a barrel. Spot gold was $2.50 stronger at US$1,575.60 an ounce. The dollar was buying 98.48 US cents.
Funny game, trading. Hands up if you would have guessed five years ago that the direction of the Australian stock market in 2012 would depend on political polling in Greece? Me neither. And yet here we are. Thanks Poly for the early heads-up this morning. US futures should be taken with a cellar-full of salt at this point but they aren't doing any harm. Just two trades, this morning, both highly speculative, strictly intraday and too illiquid to mention.
