Regional share markets and US futures rallied this morning despite a sharp rise in oil as the UN imposed a no-fly zone over Libya and news that the G7 will intervene in currency markets.
At lunchtime the ASX 200 was ahead 42 points or 0.9% at 4597 as a broad recovery lifted cyclical sectors but left a handful of defensive sectors in the red. Resource stocks and small caps topped the sector gains, suggesting a pick-up in risk appetite.
Asian markets built on the overnight rebound in equities in Europe and the US. Japan's Nikkei was recently up 1.84%, Shanghai 0.95% and Hong Kong's Hang Seng 0.24%. Dow futures were recently at a bullish +73.
Oil spiked more than US$2 a barrel this morning after the United Nations Security Council voted to impose a "no-fly zone" over Libya. Crude oil futures were recently up $1.78 since 7.15 am this morning at $103.11 a barrel after running as high as $103.47. Spot gold was $4.40 stronger at $1,409.40 an ounce.
"The situation in Japan has calmed down enough that attention has returned to the problems in North Africa and the Middle East," the president of the Schork Group in the US told Fairfax. "Gaddafi's forces are on the offensive in Libya, the Saudis are in Bahrain to quell a Shi'ite uprising, and the trouble may spread further."
Elsewhere, the Group of Seven industrialised nations agreed to work together to stabilise the yen, which hit a post-WWII high this week following the earthquake and tsunami. The news boosted the Australian dollar, which jumped more than 3.5% from buying 77.50 yen before the announcement to 80.72 recently.
Radiation levels at the Fukushima Dai-ichi nuclear plant have fallen this morning, according to Japan's Nuclear and Industrial Safety Agency. Radiation a kilometre from the plant dropped to 279.4 microsieverts per hour from 292.2 microsieverts per hour last night.
What's wrong with this picture: oil up this morning, gold up, US dollar up, US futures up. Very unusual to see all four rallying at once. Something normally gives. Let's hope it's not equities. Good to see the UN belatedly support the rebels in Libya, but the short-term impact on equities is likely to be negative. (Rising oil price, rising US dollar = headwinds for US shares.) Small price to pay, imo. This morning was an exercise in patience for this trader. Took until 11.40 to find a trade. Just two buys: ANN at 12.80 because it has bounced from around that level three times in the last three days and BKY at 77 because it was under-performing the rest of the uranium sector.
