A second day of gains in the big banks and a positive mood across Asia has helped the share market narrow its loss for the week.
At lunchtime the ASX 200 was 38 points or 0.7% ahead at 5393 and just seven points below last Friday's closing level. A mixed morning saw gains in financials +1.2%, industrials +1.1% and telecoms +0.9% counter a flat session for metals & mining.
The gains followed another round of record closes on Wall Street after Janet Yellen, nominated to replace Ben Bernanke as chairman of the US Federal Reserve signalled no immediate change to her predecessor's monetary policy.
"She thinks quantitative easing is working and the benefits outweigh the costs," Shane Oliver, head of investment strategy at AMP, told Bloomberg. "The reasonable equity valuation in the Asian region, combined with the increasing signs that gradual global recovery is continuing and monetary policy globally is going to remain highly stimulatory, that's an extremely positive backdrop for share markets."
Asian markets extended yesterday's gains. China's Shanghai Composite was lately up 0.84%, Hong Kong's Hang Seng 0.96% and Japan's Nikkei 1.47%. Dow futures were up nine points or less than 0.1%.
Crude oil futures advanced 20 cents this morning to US$94.10 a barrel. Spot gold was $2.50 stronger at US$1,289.50 an ounce. The dollar was buying 93.37 US cents.
For what little it's worth, with the taper likely pushed back until March I've revised my medium-term stance to "cautiously bullish" until the other side of Christmas when the US pollies will start swinging handbags again. Meantime, barring black swans, the XJO looks to have a reasonable chance at taking out last month's five-year high. Of course, all of this can change in an instant. One reason I day trade is because I can't read the future. Nor could I find much in the way of trading action this morning. Got so desperate that I had a quick dip in PSY. (I knew if the trade went wrong I could blame Fib and accept absolutely no responsibility for it. It's a great get-out clause.) Cleared a couple of pips for a day's wage and left it at that.
