Morning all,
Jim is having internet issues so I will be opening this mornings pre market
happy trading
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With stocks and commodities sold off hard this year so far, it doesn’t take much to make them jump.
And jump they did on Friday after the Bank of Japan surprised observers by cutting a key interest rate to a negative level.
The central bank hopes to spur inflation, which has been persistently low, and signalled it was willing to cut rates even deeper if needed.
News of Japan’s fresh stimulus came hot on the heels of hints that Europe could head further in the same direction. Little more than a week ago, European Central Bank president Mario Draghi said the bank would review its policy in March, which the market took to mean further stimulus.
The two central banks are now cutting rates even as the US has started to hike, and Draghi has said the divergence could last for a while as the challenge of low inflation persists around the world, with different countries trying out different courses of action to fix it.
Traders, at least, welcomed the move, sending US stocks soaring.
On Wall Street, the
Dow Jones Industrial Average climbed 2.5 per cent. The
S&P 500 also soared 2.5 per cent and the
Nasdaq Composite Index jumped 2.4 per cent.
A continuing oil rally didn’t hurt stocks either.
Speculation that OPEC and Russia could act together to cut production put a rocket under the oil price late last week, even though OPEC officials were quick to say no talks were planned.
US Nymex crude rose 1.2 per cent to $US 33.62, its highest close since January 6, while global benchmark
Brent crude gained 2.5 per cent to $US34.74. Even so, both prices are lower over the month of January.
Energy stocks followed suit, rising 2.6 per cent.
Economic data was the only disappointment, although not enough to dampen the widespread enthusiasm.
The US economy expanded at a slower rate than economists expected in the fourth quarter, official data showed.
US GDP rose by 0.7 per cent in the last three months of 2015, lower than forecasts of 0.8 per cent.
Analysts will be watching to see if the fourth quarter figure is followed by a rebound or the start of a period of weaker growth. Over calendar 2015, GDP rose by a steady 2.4 per cent, the same as the prior year.
In Europe, investors woke up to the news of Japan’s surprise easing, sending equities higher during the day.
Germany’s DAX 30 rose 1.6 per cent,
France’s CAC 40 advanced 2.2 per cent and the
UK’s FTSE 100 gained 2.6 per cent.
Base metals on the London Metal Exchange rose between 0.2 per cent and 4.3 per cent, with
aluminium rising the least and
tin the most.
In London trade,
BHP Billiton slipped 0.5 per cent and
Rio Tinto rose 0.8 per cent.
Iron ore held steady at $US41.50 a tonne, with a slight gain of US20c or 0.5 per cent over last week.
In other market action:
— The
Australian dollar is slightly weaker after the Bank of Japan’s easing. At 7am (AEDT), the local unit was buying
—
Gold edged up US30c to $US1116.40 per ounce despite the risk-on sentiment.
—
ASX futures are pointing 37 points higher at 6.55am (AEDT).
Ahead: The CoreLogic RP Data home value index is due, along with the Performance of Manufacturing Index. In the US tonight, expect data on personal income and spending, construction spending and the ISM manufacturing index.
Full article can be found here ...
