Market wrap: Stocks and commodities rebounded overnight as upbeat US economic news overshadowed Japan's struggle to avert a nuclear crisis and violent clashes in Libya.
Australian shares are likely to open in positive territory after the June SPI futures contract ended the night 18 points or 0.4% stronger at 4575.
US stocks halted a three-day slump as domestic economic news topped forecasts and bellwether stock FedEx delivered an unexpectedly strong outlook. The S&P 500 reversed more than half of yesterday's steep decline, rising 1.34% overnight. The Dow added 161 points or 1.39% and the Nasdaq 0.74%.
"After a while even the market senses it has overdone the anguish," the chief market strategist at Key Private Bank told MarketWatch. "And, we had strong reports on the US economy, particularly with the leading indicators this morning, which were not only strong but accelerating."
The night's US economic news included a drop in weekly jobless claims, a sixth straight rise in national manufacturing, the fastest expansion in Philadelphia-region manufacturing since 1948, rising inflation and a 0.8% rise in economic indicators, suggesting the economy is picking up steam. Also helping sentiment was a sharp rise in Dow component FedEx after the cargo giant surprised analysts with its profit outlook for next quarter.
European markets recovered as investors snapped up oversold industrials and insurers on speculation that the latest correction has overshot. Britain's FTSE rallied 1.75%, Germany's DAX 2.2% and France's CAC 2.43%.
In Japan, engineers worked through the night to reconnect power to the cooling system at the damaged Fukishima nuclear plant. G7 officials will gather today at a specially-convened meeting to discuss the crisis.
Resource stocks were among the big gainers in the US as commodity prices had their biggest rally since September. In US trade, Rio Tinto added 4.2%, BHP 3% and Alumina 1.4%.
Oil shot back through US$100 a barrel as a government crackdown in Bahrain raised regional tensions and the Libyan conflict continued. Crude futures were recently up $3.45 or 3.5% at $101.43 a barrel.
Copper had its biggest one-day rally since November as prices at a three-month low attracted Chinese buyers. In London, copper rose 3.2%, aluminium 2.5%, lead 2.5%, nickel 3.9%, tin 4.1% and zinc 2.05%. US copper was recently up 4%.
"Buying has picked up and we have seen some pretty solid clips of Chinese buying, which has been absent for a while," an analyst with Barclays Capital in New York told Reuters. "Consumers in China are clearly price-sensitive right now."
Gold benefitted from currency hedging after signs of rising inflation in the US. Consumer prices rose 0.5% in February, ahead of expectations. Gold for April delivery rose $8.20 or 0.6% to $1,405 an ounce.
TRADING THEMES TODAY
REBOUND?: You can't ask for a much stronger overnight lead than that, but local futures traders can hardly be accused of irrational exuberance. They've priced in a modest rise this morning because our market pre-empted much of last night's overseas action during yesterday's 80-point turnaround. We'll remain hostage to news out of Japan today, where the crisis at Fukushima is unresolved. It may pay to watch the news wires.
OIL: Anyone remember the Middle East crisis? Oil staged a sharp recovery overnight as US domestic news raised demand expectations and traders remembered that problems remain in North Africa and the Middle East. Oil will again become a significant problem for equity markets if it can build on last night's rebound, but another major up-leg seems less likely amid growing signs that the "Jasmine Revolution" may have peaked. UN/NATO inaction has allowed Gadhafi to regain control of most of Libya and Bahrain is mopping up opposition leaders.
ECONOMIC NEWS: An unusually quiet end to a busy week has nothing significant scheduled here or in the US tonight. The Japan crisis remains the focus of market interest, with a special G7 meeting called by Japan for today to discuss the nation's economy in the aftermath of the earthquake, tsunami and nuclear incident.
