Market wrap: A surge in metals prices and a strong night on Wall Street point to healthy gains for Australian equities at today's open.
Futures traders expect our market to open 40 points higher after upbeat Chinese economic data boosted commodity prices and a commitment from European leaders to stand by debt-laden Greece cheered Wall Street. The March SPI futures contract closed at 4562.
In the U.S., the Dow rallied 1.05%, the S&P 500 put on 0.97% and the Nasdaq 1.38% after European leaders announced that euro-zone countries will support Greece through its debt crisis, but do not need to provide immediate financial support. Traders shrugged off the absence of specific measures in the announcement - there was no mention of loan guarantees or plans to buy Greek bonds.
European Council President Herman Van Rompuy said euro-zone countries will offer "determined and coordinated action if needed" to assist Greece. But he said Greece had not requested direct aid.
"The market's drifting higher just because we now know there's going to be some aid there," a U.S. portfolio manager told MarketWatch. "That's a relief in itself. But there's no details."
Several U.S. economic releases were postponed due to snow storms in Washington, however, weekly jobless claims came in better than expected. First-time claims for unemployment benefits dropped by the biggest amount since July and eased fears that a spike last month pointed to further deterioration in the jobs market.
U.S. financial stocks softened but resource sectors climbed as a renewed appetite for risk brought investors back into commodities. The U.S dollar hit a seven-month high against the euro, but the dollar index, which measures the greenback against a basket of major currencies, was recently flat.
There were big gains on the London Metals Exchange after yesterday's Chinese economic data soothed fears of flagging demand. Copper jumped 6% to a two-week high and broke back through its 100-day moving average.
"Risk appetite is improving as a resolution to the Greece problem is contemplated, the resource equities are coming out with decent results and there's very strong demand from China for metals like copper," an analyst at Deutsche Bank told MarketWatch.
In London, aluminium climbed 1.7%, lead 3.5%, nickel 3.75%, tin 2.7% and zinc 3.3%. Gold charged around 2% higher on relief that any rescue for Greece did not appear to require selling the precious metal. The spot price was recently trading at $1,092.40 an ounce.
Crude oil futures also tracked higher, trading recently at $75.14 a barrel, up 0.83% for the session.
European reaction to the announcement about Greece was muted. Gains in resource stocks helped Britain's FTSE climb 0.57%, but Germany's DAX dropped 0.6% and France's CAC 0.5%.
TRADING THEMES TODAY
RESOURCES IN RECOVERY: A strong night for metals, particularly copper and gold. Yesterday's Chinese data seems to have soothed concerns that industrial demand was evaporating. There are some nice basing/reversal formations developing among our beaten-up resources stocks (higher highs and higher lows) and least night's action should deliver opportunities today.
ECONOMIC NEWS: There's nothing scheduled locally today but snowstorms in the U.S. have created a backlog of data tentatively rescheduled for release tonight. The list includes retail sales, consumer sentiment and inflation expectations, business inventories, natural gas storage, crude oil inventories and the Federal Budget Balance.
