Morning traders. Thanks Trees and after-market regulars.
Market wrap:
A downbeat week on the domestic share market looks set to end on an upswing after resource and energy stocks helped push Wall Street towards record levels following a ceasefire agreement between Russia and Ukraine.
The March SPI 200 futures contract rallied 30 points or more than 0.5% to 5747 as oil, iron ore, gold and most base metals improved. The ASX 200 fell for a fourth straight session yesterday following unexpectedly weak January employment data.
US stocks hit their highest level this year as strong earnings, merger activity, a bounce in oil and news of a ceasefire deal in Europe overshadowed a stalemate in Greece's debt discussions. The S&P 500 rallied 20 points or 0.96% to end within three points of December's all-time closing high. The Dow added 110 points or 0.62% and the Nasdaq Composite advanced 57 points or 1.18% to its strongest close since March 2000.
“There’s general optimism around the US economy and a little bit of relief that some of the major international issues are not going to impinge just yet on positive trends here,” John Carey, fund manager at Pioneer Investment Management in the US, told Bloomberg. “For the moment people seem to be somewhat more at ease about some of the trouble spots in the world. People are looking at the glass half full.”
European markets rallied after Russian President Vladimir Putin and Ukrainian President Petro Poroshenko signed a peace accord to end a civil war on Ukraine's eastern border, where pro-Russia rebels have been fighting Ukrainian government troops for ten months. The signing of the accord staved off the threat of further US and European sanctions against Russia.
Also helping sentiment were reports that the European Central Bank has increased emergency funds available to Greece's banks to avert a liquidity crunch while the country's new government attempts to renegotiate the terms of its bailout assistance. European finance ministers will reconvene on Monday to discuss the Greek government's latest proposal. The Stoxx Europe 600 put on 0.75% to a seven-year high as Germany's DAX advanced 1.56%, France's CAC 1% and Britain's FTSE 0.14%.
Cisco was one of the main drivers behind a tech rally, rising 9.4% after both profits and sales topped estimates. Expedia was another standout, rising 14.5% after announcing a take-over of Orbitz Worldwide. Overnight, the Nasdaq Composite drew within 4% of its record high set in March 2000 at the peak of the dot-com bubble.
The market shrugged off soft economic data. Retail sales declined for a second month in January, falling by a seasonally adjusted 0.8% in a sign that consumers remain reluctant to spend despite an improving labour market and falling energy prices. First-time claims for jobless benefits increased by 25,000 to 304,000 last week.
The energy sector rebounded by 1.31% as energy traders interpreted the Ukraine ceasefire as a positive for Russian growth and energy demand. West Texas Intermediate crude oil for delivery in March bounced $2.37 or 2.4% to settle at US$51.21 a barrel, paring two days of losses.
"The ceasefire in Ukraine with Russia will lower the chances of new sanctions on Russia, which should help the growth outlook for the region,” Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch. “While the oil market still has some very bearish supply issues to overcome from a price standpoint, the action is looking more like a bottom.”
BHP and Rio Tinto recovered from one-week lows in the US as the price of iron ore ticked higher. BHP rose 1.81% and Rio Tinto 2.95%. Spot iron ore for import to China yesterday edged up 60 cents to US$62.80 a dry tonne.
Copper advanced to its highest price in a week following reports that Chinese house prices improved in January for the first time in nine months. In London, copper put on 2.4%, aluminium 1.1%, lead 1.8%, tin 2% and zinc 1.3%. Nickel lost 0.7%. US copper for March delivery was recently up 2.4% or more than six cents at US$2.60 a pound.
Gold stocks rose in the US after the precious metal got a tepid boost from a weak US dollar and a World Gold Council report that demand improved towards the end of last year. The NYSE Arca Gold Bugs index rallied 0.98% as gold for April delivery settled $1.10 or 0.1% ahead at US$1,220.70 an ounce, its first rise in three sessions.
The dollar was this morning buying 77.42 US cents.
TRADING THEMES TODAY
BOUNCE: Assuming Glenn Stevens does not say anything too market-unfriendly in Canberra this morning, a desultory week looks like ending on a high note. The RBA Governor faces one of his periodic grillings at the hands of the pollies from 9.30am. He usually brings his poker face, but will be under particular scrutiny after cutting the cash rate this month. Any hint that he is ready to cut again next month should give the market a boost. Meanwhile, Wall Street looks ready for another crack at the December highs. The oil slump is now ancient history, Ukraine has been put to bed (again) and the market expects Europe and Greece will fudge their way through the latest crisis.
ECONOMIC NEWS: RBA Governor Glenn Stevens is due to testify before House of Representatives' Standing Committee on Economics from 9.30am EST. Europe releases trade and GDP figures tonight. US highlights are preliminary consumer sentiment and inflation expectations, and import prices.
