Market wrap: Stocks are primed for a bumper open after international investors took yesterday's Australian rate rise as a sign of global recovery.
Overseas markets rallied strongly for a second night as a weakening US dollar sparked a buying surge in commodities and gold hit a record high. The energy and materials sectors led U.S. stocks higher. The S&P 500 index put on 1.37%, the Dow added 1.37% and the Nasdaq 1.71%. European markets were even stronger. Britain's FTSE charged 2.26% higher, France's CAC 2.59% and Germany's DAX 2.7%.
International investor attention turned to Australia after the RBA became the first major central bank to raise interest rates since the start of the global downturn. Thoughts then turned to the effect on the U.S. dollar, with dollar-based commodity stocks including energy, materials, mining and multinationals benefiting from the greenback's decline. The U.S. Dollar Index slipped 0.5%, while the Dow Jones-AIG Commodity Index was up 1.7%.
Precious metals miners rallied 6.11% as gold shot to a new high. Also strongly ahead: oilers +2.83% and natural gas companies +2.47%.
The long-awaited break to a new high for gold futures came overnight as the US dollar slumped on speculation about the end of dollar-based oil trading. Gold for December delivery added 2.2% to $1,039.70 an ounce, a new record closing level. The spot price was recently $1,042.10 an ounce.
Crude oil futures hit $72 a barrel but have since pulled back to $71.07, around 0.67% higher. Base metals continued to climb back from recent lows. Aluminium added 1.33%, copper 2.79%, lead 2.97%, nickel 3.16%, tin 1.76% and zinc 2.3%.
Futures traders expect buying in our resources sector to give a big open this morning. The SPI futures index was 59 points higher at 4660.
TRADING THEMES TODAY
GOLD: Well, duh. This morning's record high and a sliding US dollar will mean plenty of interest in our goldies this morning. The challenge as always for day traders is to find a share that doesn't have all today's gains baked in to the opening price.
INTEREST RATES: Be wary of sectors that are particularly sensitive to yesterday's interest rate hike. These include retail, financials, media and house builders. All were sold off after yesterday's announcement. Any opening bounce this morning may be an exit opportunity.
ECONOMIC NEWS: Speaking of house builders, there are a couple of local indicators due this morning: the AiG Construction Index for last month at 10.30 am and Housing Finance for August at 11.30 am. The big news in the US tonight is the launch of the Q3 reporting season, led by Dow Jones Index component Alcoa.
