Market wrap: Stocks look set for a bright start to the week after positive corporate earnings helped Wall Street end last week on a high note.
Futures traders have priced in a 28-point gap higher at today's local market open. The SPI futures index closed at 4754 after US stock indexes rebounded on Friday to finish around 2.5% higher for the week.
The Dow Jones Industrial Average gained 73 points or 0.72% on Friday to close just below the 13-month high it reached on Wednesday. The S&P 500 rallied 0.57% and the Nasdaq 0.88% after strong earnings reports from Disney, Abercrombie & Fitch and JC Penney, plus a key analyst upgrade for Goodyear.
The corporate news allowed investors to ignore a second grim monthly reading on consumer confidence. An index of consumer sentiment slumped to 66 from 70.6 in October, against economists' expectations of a rise. Eighty percent of S&P 500 companies that have released results beat the average analyst estimate for third-quarter earnings per share. That's the highest proportion for a quarter in data going back to 1993.
Among US sectors, there were solid gains for gold/silver miners, +2.05%, airlines +2.05%, REITs +1.43%, industrials +1.06% and oilers 0.81%. Financials lagged - the S&P Bank Index fell 1.41%.
The major European markets closed mixed despite Europe officially emerging from its deepest recession since World War Two. Britain’s FTSE gained 0.38% and Germany’s DAX 0.4% but France’s CAC ended 0.05% in the red.
A fall in the US dollar helped commodities. Gold also benefitted from news that Vietnam ended a ban on imports of the precious metal. The spot gold price rallied more than 1.5% to $1,118.50
Crude oil futures were pressured by rising supplies and the poor consumer sentiment reading in the US. Crude futures retreated 0.8% to close at $76.35 a barrel.
Rising stockpiles continued to weigh on base metals but the falling dollar helped most inch higher in London. Copper added 0.42%, lead 0.44%, zinc 1.16% nickel +0.1%, tin 0.51% and aluminum slipped 0.15%.
TRADING THEMES THIS WEEK
GOLD: Friday's bullish news out of Vietnam sent the spot gold price racing back towards the old high and should support the global market this week. The Asian nation has traditionally been a strong consumer of the precious metal. Imports were stopped in May 2008 but have been reintroduced after domestic prices soared in response to the cut-off in supply.
ECONOMIC NEWS: After a quiet week for economic news in the US, the next five days are very busy. Tonight's line-up features retail sales, manufacturing data, business inventories and speeches from Fed Chairman Ben Bernanke, New York Fed President William Dudley and Chicago Fed President Charles Evans. The rest of the week is just as data-intensive and we could see a return to volatility after last week's relatively smooth ride.
