Market wrap: Australian futures are pointing to third day of big advances after US shares soared higher on a wave of earnings results-driven optimism.
The Dow Jones index rocketed 257 points or 3.07%, its best night since mid-March, as US investors bet that companies will continue to beat expectations this quarterly reporting season. According to MarketWatch, the results to date bolster hopes of a long-awaited US economic recovery: "strong reports by Goldman Sachs and Intel suggest that capital is flowing more freely and that companies are buying equipment as a first step toward ramping up production". The S&P 500 added 2.96% and the Nasdaq put on 3.51%.
There was green right across US bourses - banks up 4.23%, REITs 3.65%, airlines 5.59%, precious metals miners 4.63% and oilers 3.5%.
A slide in the US dollar helped commodity prices and flowed through to miners and oilers. Crude oil futures had their first positive session in four, bouncing 3.4% to $61.83. Gold futures hit their highest level in two weeks, up $14 to $939.10 as investors hedged against the falling US$.
An overnight report showing signs of stability in US manufacturing put a rocket under copper. The metal leaped 4% in US trade, its biggest jump in five weeks, and is again threatening the old resistance level. There were similar gains for other base metals, with aluminium up 3%.
With 15 minutes left to trade, futures traders were pricing in another huge day on the local market. The SPI was up 83 points at 3971.
TRADING THEMES TODAY
RESOURCES: Commodity prices are running hard as optimism sweeps markets - local share prices have some catching up to do. Oil, gold and base metals have all turned higher in the last few days. There should be big gains in the mining, energy and materials sectors today.
MOMENTUM TRADES: For the majority of shares, today will be more of the same, so buy shares in an uptrend and surf the wave. You don't have to get in at the start of a move to make money. But bear in mind that profit-taking will creep in because some traders are going to be sitting on massive profits. Three-day moves with this sort of thrust are extremely rare. I'll look to buy early and take profits on any loss of momentum.
LOCAL QUARTERLY REPORTS: There are quarterly reports due out today from a few of the bigger miners - PDN, WPL, KZL and ILU, plus JML and CSE and a few others.
