Market wrap: Australian stocks look set to snap a four-day losing streak after a bounce on global markets overnight.
Futures traders expect our market to open well off yesterday's near-three-week low. The SPI futures index was up 41 points at 4624.
Wall Street rallied overnight on evidence that the services sector expanded for the first time in a year. The S&P 500 index rose 1.49%, the Dow Jones 1.18% and the Nasdaq 0.98%.
The ISM non-manufacturing index rose to 50.9% from 48.4% in August. A reading above 50% indicates more firms are expanding than contracting. This was the highest reading since May last year.
There were strong gains in the US for banks, up 4.56%, REITs +2.73%, precious metals miners +3.3% and oilers +1.95%. European markets recovered some of yesterday's losses. Britain's FTSE advanced 0.71%, France's CAC +0.69% and Germany's DAX +0.75%.
Crude oil futures rallied on the uptick in optimism about the US economy, rising 0.6% to $70.37 a barrel. A weakening US dollar saw gold futures surge back towards recent highs. The spot gold price was recently up $15 at $1017.20.
Base metals strengthened in London. Aluminium rose 0.11%, copper 2.07%, lead 1.18%, nickel 2.31%, tin 0.18% and zinc 0.19%.
TRADING THEMES TODAY
BOUNCE: Friday's action in the U.S. provided a hint that markets were ready to bounce after a four-day decline. Last night's action is the confirmation. The start of the American Q3 reporting season tomorrow night will test whether this is the start of the next up-leg or just a relief rally.
INTEREST RATES: For the first time in a couple of years there's a genuine possibility that the RBA might raise interest rates today. The odds favour a stay of execution today and a rise next month but there are no guarantees as Australia continues to skate over the worst of the downturn. The RBA's decision will be announced at 2.30 pm.
ECONOMIC NEWS: The 2.30 pm interest rate announcement is the big news but there are also August trade figures due at 11.30 am. There's nothing significant on the U.S. calendar tonight before the start of the Q3 reporting season.
