A record night on Wall Street and a China-inspired bounce in commodities have Australian shares poised to extend yesterday's gains.
The June SPI 200 futures contract ended the night session 11 points or 0.2% higher at 4980 as the Dow closed at an all-time high and oil and most metals improved.
The Dow hit a new intraday peak at 14,716 before a late bout of profit-taking reduced its rise to 60 points or 0.41% at 14,673, its best ever finish. Rallies in all 10 sector groups pushed the S&P 500 to within reach of a record close before the late pullback left the index less than two points off the old closing high, up six points or 0.38% for the session. The Nasdaq put on 0.49%.
Resource and energy stocks led the advance as commodity markets rebounded following yesterday's meek Chinese inflation report. Consumer inflation cooled dramatically last month, freeing up policy-makers to extend accommodative measures to stimulate the economy. Australia's big two miners enjoyed substantial gains in US trade: 4.45% for BHP and 5.63% for Rio Tinto.
"The commodity pop is basically tied to the view on China," the manager of the Wasatch-Large Cap Value Fund in the US told Bloomberg. "The market is acting strongly. It doesn't seem to want to go down. You get dips, and they seem to pop right back."
Aluminium producer Alcoa ended the session 0.12% weaker after launching the Q1 quarterly earnings season yesterday with a result that beat profit estimates but missed on revenue. The next big names to report are JPMorgan and Wells Fargo on Friday.
Risk indicators in the US were mixed: the Morgan Stanley Cyclical Index rallied 0.69% but the Russell 2000 index of small caps and Dow Jones Transportation Index fell 0.23% and 0.32%, respectively.
Base metals extended this week's recovery on bets that loose monetary policy in China will eventually increase demand. US copper for May delivery was recently up seven cents or 2.1% at US$3.44 a pound. In London, copper advanced 2.3%, aluminium 1.5%, lead 1.5%, nickel 0.9%, tin 0.2% and zinc 1.4%.
An earthquake near Iranian oil facilities helped crude regain the US$94 a barrel level. West Texas intermediate crude for May delivery was recently up 65 cents or 0.7% at US$94 a barrel amid speculation about disruption to Iranian supplies.
Gold reached its highest level in more than a week as the US dollar retreated. Gold for June delivery added $12.50 or 0.8% at US$1,585 an ounce.
German shares declined after trade data showed declines in exports and imports, but gains in resource stocks helped other European markets rally. The DAX lost 0.32%, France's CAC put on 0.12% and Britain's FTSE added 0.57%.
TRADING THEMES TODAY
CAUTIOUSLY AHEAD: A late pullback took some of the shine off a generally bright night on Wall Street. That leaves our market without much incentive to repeat yesterday's China-fuelled surge, but we should still see mild gains unless China's trade report, due around lunchtime, disappoints. It will be interesting to see if yesterday's bull run in blue chips generates any interest at the spec end of the market today. May be too soon after last week's nasty plunge, but we can hope. The US is light on economic data this week, which should allow share indexes room to recover from last week's jobs shock before we get into the meat of the earnings season next week.
ECONOMIC NEWS: Consumer sentiment data is due at 10.30am EST. Chinese trade balance figures are also scheduled today, exact time uncertain but usually around lunchtime AEST. Tonight's highlight in the US is the minutes from the last Federal Reserve meeting. Also due: crude oil inventories and the Federal budget balance.
