Market wrap: A bright start to the trading day lies ahead after Wall Street rallied on strong earnings results and evidence of rising economic activity.
Local futures traders expect our market to eradicate two days of weakness at the open today. The SPI futures index closed 41 points higher at 4860 after the major U.S. indexes surged back towards this year's closing highs. The Dow rallied 1.33% and the S&P 500 1.06%. The Nasdaq lagged at +0.68% after some disappointing tech company reports.
Optimism returned to the market after a host of companies, including McDonalds, AT&T, 3M and Travelers, beat market expectations for their third-quarter earnings. Also helping sentiment were a small bounce in the US dollar off 14-year lows and a better-than-expected rise in leading economic indicators. The Conference Board said its leading index increased 1.0% last month, against expectations of an increase of 0.8%. It was the sixth straight increase and a strong signal that a "recovery is developing", the Conference Board reported. Investors ignored a disappointing weekly jobs report.
Financial stocks led the rally on Wall Street. The S&P Bank Index rose 4.73%. REITs rose 2.66%, oilers 1.41% and insurers 1.47%.
European markets were under the pump for a second day after disappointing earnings reports. London's FTSE fell 0.96%, Germany's DAX 1.21% and France's CAC 1.35%.
Concerns that China may reduce its economic stimulus to moderate rampant growth helped the US dollar but weighed on commodity prices. China's annual economic growth quickened to 8.9% in the third quarter. "Some are concerned that such swift GDP growth will lead to less fiscal stimulus and in turn, less demand," said a senior base metals analyst quoted on Reuters.
Crude oil futures slumped under $80 a barrel but bounced to recently trade at $81.17, down around 0.2% for the session. Gold futures wobbled but were recently $1.20 higher than yesterday at $1,060.
Some of the shine came off yesterday's big rally in base metals, although some advanced. In London, aluminium and copper both slipped 0.15%, lead gave back 2.7% and nickel lost 2.46% but tin gained 2.77% and zinc inched +0.2% higher.
TRADING THEMES TODAY
AFTER-HOURS WILDCARDS: A couple of big names were due to post earnings results after the closing bell in the U.S.: Amazon and American Express, plus a gaggle of smaller names such as NetFlix, BroadCom and Capital One. Amazon's shares were up 9% in after-hours trading after it reported. The market's reaction will show in U.S. futures - track them here: http://liveindices.com/
ECONOMIC NEWS: Local import and export price indices are due at 11.30 am. In the US, Fed Chairman Ben Bernanke is due to speak and existing home sales data are due.
