Market wrap: Local stocks look set to wipe out most of yesterday's heavy losses after a surge in growth delivered Wall Street's best night since July.
Confidence returned to the market after a week-long retreat on news that the US economy expanded at its fastest rate in two years, officially ending the nation's worst recession in 70 years. Third-quarter GDP rose at a seasonally adjusted 3.5% annual rate, driven by consumer spending, which rose 3.4%. Wall Street responded by sending the Dow up 2.05%, the S&P 500 up 2.25% and the Nasdaq 1.84%.
The indexes gained steadily throughout the day as investors were cheered by signs of genuine growth. "People had perhaps initially felt the 'cash for clunkers' and one-time homebuyer rebates were the only things driving the growth, but there was some genuine, external-to-government-help spending that came into play as well," said a chief investment officer quoted on MarketWatch. "Most people now are recognising that as they've had a chance to digest the numbers."
There were healthy gains for most US sectors, including banks +4.08%, REITs +4..58%, precious metals miners +4.6%, oilers +2.41% and industrials +1.95%. European markets also bounced. Britain's FTSE rose 1.13% and Germany's DAX 1.66%.
The return to growth coupled with a sliding US dollar to drive commodity prices higher. Crude oil futures surged 3.11% to recently trade at $80 a barrel. Gold futures also caught the tailwind and reversed recent losses. The spot price put on nearly $20 or 2% to trade recently at $1046.80.
Base metals surged on renewed optimism about global growth. In London, copper rose 3.48%, aluminium 2.25%, lead 5.92%, nickel 5.34%, tin 2.4% and zinc 3.2%.
Futures traders expect our market to bounce hard at today's open. The SPI futures index closed 81 points higher at 4642.
TRADING THEMES TODAY
BARGAIN HUNTING: Time to sift through oversold stocks for value. You can never tell what's around the corner but last night's trend reversal was sharp and the buying was solid through to the close, suggesting an abrupt end to this week's short, ugly correction. Hallelujah.
RESOURCES: Oil, gold and base metals bounced hard overnight. Some of the share price falls among miners this week look wildly overdone based on current resources prices.
ECONOMIC NEWS: Local private sector credit figures are due at 11.30 am - these provide an insight into business and consumer confidence. It's crowded in the US tonight: consumer sentiment data, personal income numbers, personal spending, personal consumption, a purchasing managers' index, employment cost index and core price index.
