Market wrap: Local share indexes are primed for new 2009 highs today after Wall Street rallied on a surprise fall in unemployment.
Futures traders drove the SPI futures index up 41 points to 4303 as US equity indexes hit new peaks for the year on Friday. The Dow Jones Industrial Average rose 1.2% for a weekly gain of 2.2%. The Nasdaq gained 1.4% and the S&P 500 advanced 1.3%.
The US rallied on fresh evidence that the recession is easing, after unemployment dipped to 9.4% last month against expectations of a rise to 9.7%, and fewer jobs were lost than in any month in nearly a year. An economist at Barclays Capital said, “We view it as a clear signal that the economy was emerging from the recession in July.”
There were significant gains for financials (banks up 3.5%), REITs (+5.29%), airlines (+3.12%), and transport (+3.37%). Resources stocks lagged after retreats on commodity markets.
Crude oil futures fell as the US dollar rallied, reducing the appeal of commodities as a hedge against a falling currency. September oil futures lost 1.4% at $70.57 a barrel in choppy trade. Gold futures slipped 0.4% to $955.40 but platinum added 0.4%.
Base metals benefitted from the fresh signs that the US economy is improving, reversing Thursday’s losses. Copper futures climbed 2.1% on the London Metal Exchange. Aluminum, zinc, tin, lead and nickel also gained.
TRADING THEMES TODAY
OPENING RELIEF RALLY: The uncertainty that gripped global markets towards the end of last week was removed by those better-than-expected US jobs figures. Anyone who went short on expectations of a tumble will probably cover today. That should make for big opens on some stocks. However, gains faded during Friday afternoon in the US – a possible clue that there’s not much left in this long rally in the short-term.
BASE METALS: The five-month rally in base metals is intact after Friday’s action. The medium-term trend is firmly up and it looks like last week’s wobble was just another buying opportunity.
REITs: The American REIT sector had a spectacular week, with the major sector index climbing from just above 140 on Monday to finish the week at 163.94, up another 5.29% on Friday. Our REITs have seen nothing like those gains. Thoughts anyone? Trading candidates today?
