Australian shares surfed a wave of global optimism this morning, helped by a larger-than-expected trade surplus that overshadowed a surprise drop in retail sales.
At lunchtime the ASX 200 was ahead 80 points or 1.8% at 4666 and on track for its biggest rise in nearly two months. All sectors were trading higher, led by substantial gains in the big miners and banks. Cyclical stocks outperformed defensives and the ASX 20 index of blue chips out-performed the Small Ordinaries.
"We had a very strong performance overnight overseas, with quite a few pieces of positive economic data around the globe, starting with strong manufacturing data out of China, then the positive jobs data from the US," Australian Stock Report head of research Geoff Saffer told Fairfax. "A lot of the fears of the last week or so regarding sovereign debt issues in Europe took a back seat and risk came back on the table."
A fall in imports and modest rise in exports delivered a larger-than-expected trade surplus in October. The surplus of $2.625 billion was the seventh monthly surplus in a row and topped the median market forecast for a surplus of $2 billion.
Retail sales disappointed, dropping 1.1% in October against expectations for a rise of 0.4%. The news helped drive the dollar lower, recently buying 96.52 U.S. cents.
"This is a disconcertingly weak sales read, even allowing for online spending going offshore and not being captured in the survey," Westpac senior economist Matthew Hassan told Fairfax. "Even allowing for price discounting and even allowing for a cautious consumer this is downside surprise and an ominous sign leading into November when we did have a rate rise and sentiment cooled off noticeably."
Asian markets followed the strong overnight lead from Europe and the U.S. Japan's Nikkei rallied 1.83%, Shanghai 1.31% and Hong Kong's Hang Seng 1.31%. Dow futures were recently at +9.
Crude oil futures eased 31 cents this morning to $86.39 a barrel. The spot gold price was $4 stronger at $1,391 an ounce.
A ripper of a morning, even if I am the only trader on the thread not on MYG. One of those rare occasions when our market builds on a big open - a very bullish signal for the short-term market direction. My pre-market breakout research delivered nothing of any use, so I fell back on my standard pullback plays. RIM was the big winner but I also pulled a couple of points from BRU. Let the good times roll.
