Market wrap: Australian stocks look set to play catch-up today after an overnight surge on overseas equity and commodity markets as fears over Dubai's debt woes receded.
Wall Street pushed back towards 2009 highs as local economic news overshadowed broader concerns. The Dow stage a triple-digit rally, rising 127 points or 1.23% to 10,472. The S&P 500 gained 1.21% and the Nasdaq 1.46%.
The mood on Wall Street was helped by jumps in housing activity and construction, solid factory output and strong manufacturing data out of China. The financial sector was held back by bearish analyst comments.
"We've shaken off the Dubai news at this point, and the path of least resistance seems to be to the upside again," said a senior trader quoted on MarketWatch.
"Clearly the Dubai issue was a jolt to the system," an investment officer told MarketWatch. "But the market seems to have digested that shock quite well, which says to me a lot of these issues are priced into the market already. While they'll jostle it a bit, they have not been able to knock it from its perch."
Precious metals miners forged ahead in the U.S. The key industry index closed 4.88% higher. Oilers rallied 2%, airlines 2.7%, telecoms 1.8% and tech stocks 1.6%. The banks were flat.
The major European markets surged as bargain hunters snapped up banks hit hard by Dubai's debt concerns. Britain’s FTSE added 2.34%, Germany’s DAX 2.68% and France’s CAC 2.6%.
A 0.7% slide in the U.S. dollar index helped fuel a boom night for commodity prices. Gold topped $1,200 an ounce for the first time after Barrick Gold, the world's largest gold miner, announced it had scrapped all of its gold hedges to take advantage of the rising price. The spot price was recently trading at $1,197.90 an ounce, a rise of 1.4%.
Oil advanced for a second day as Chinese and American manufacturing data showed continuing expansion. Crude oil futures touched $79 a barrel and were recently trading at $78.19, a gain of 1.41%.
Copper hit a 15-month peak and other base metals hit 2009 highs. In London, copper advanced 1.88%, aluminium 2.43%, lead 4.89% and zinc 2.5%. Nickel remains the problem child in the group, down 0.3% as stockpiles near the all-time high established in 1994.
Futures traders expect our market to put the Dubai sell-off behind it at today's open. The SPI futures index closed 51 points higher at 4778.
TRADING THEMES TODAY
METALS: Gold at a record high, copper at a 15-month high and aluminium, lead and zinc breaking out of rising wedges. Plenty of fundamental reasons for our mining sector to shine today.
BREAKOUT TRADES: The brakes have come off overseas markets, commodity prices are rallying and our futures are strong. That all adds up to a high probability of good breakout trading today. A quick look at the charts suggests a few early candidates: RNG, KCN, AIO and CGF. There will be many more.
ECONOMIC NEWS: The local calendar is empty today but the US is busy as ever. Tonight: non-farm employment figures, job cuts, the Fed's beige book and crude oil inventories.
