Shares are set to open at their highest level in a month after Wall Street overcame a White House bomb-scare flash crash to advance for a third night.
The June SPI 200 futures contract jumped 50 points or 1% to 5052 this morning as a rise in sales of new US homes and solid corporate earnings offset another weak night on the London Metal Exchange following yesterday's soft Chinese monthly manufacturing report.
The S&P 500 closed 17 points or 1.06% higher despite a mid-session plunge caused by a fake Tweet on a hacked Associated Press account. The Tweet, alleging an explosion at the White House had injured President Barack Obama, caused the Dow to drop more than 150 points in minutes before quickly recovering to end the session 152 points or 1.04% higher. The Nasdaq put on 1.1%.
"The mini crash and recovery does say something about the impact Twitter feeds can have," the chief investment strategist at Key Private Bank in the US told MarketWatch. "It probably does reveal a little bit about the skittishness of this market, not that it wouldn't have had an impact in any case, but the market has struggled with confidence."
The market was strongly ahead before the fake bomb report following a rise in new home sales and some well-received first-quarter earnings. An index of US house-builders surged 5% after home sales lifted 1.5% last month, defying the recent run of soft US economic data. A long list of companies beating analysts' earnings expectations last night included Netflix, Dow component Travelers, Dupont, Lockheed Martin, MetLife and Delta Airlines.
There was a positive reaction to market heavyweight Apple's Q1 earnings report, released half an hour after the close of regular trade on Wall Street this morning. Shares jumped 4.7%, extending an intraday gain of 1.84%, after the iPhone maker announced plans to increase its dividend and buyback program.
Also helping market sentiment were substantial gains in Europe after a plunge in Spanish borrowing costs marked a possible turning point in the euro-zone debt crisis. Shares surged after yields on Spanish and Italian debt fell to their lowest level since November 2010. Germany's DAX charged 2.41%, France's CAC 3.58%, Britain's FTSE 2%, Italy's FTSE MIB 2.93% and Spain's IBEX 35 3.25%.
"The message in this is that Italian and Spanish bonds have become investible again, which they weren't last year," the managing director at Spiro Sovereign Strategy told MarketWatch.">MarketWatch. "There has been a shift in market psychology — investors have gone from perceiving Italy and Spain as high risks to high yields."
Although all 10 S&P industry groups advanced, an index of precious metals miners fell 1.91% after gold fell for the first time in four sessions. Gold for June delivery was recently down $8.80 or 0.6% at US$1,412.50 an ounce, pressured by a rising US dollar and the rally in equities. May silver reversed Monday's gain, falling 42 cents or 1.8% to US$22.90 an ounce.
Copper marked a new 18-month low after Goldman Sachs cut its price forecasts and data from China pointed to a manufacturing slowdown. US copper for May delivery was recently off five cents or 1.4% at US$3.09 a pound. In London, copper and nickel dropped 1.1%, tin 1.2% and zinc 0.3%. Aluminium put on 0.3% and lead 0.3%.
Oil edged higher with equities. West Texas intermediate crude for June delivery was lately up 23 cents or 0.3% at US$89.43 a barrel.
TRADING THEMES TODAY
POSITIVES OUTWEIGH NEGATIVES: Whew, there was a lot going on last night. Huge gains in Europe and a nice advance in the US despite the bomb scare nonsense. China weighed on base metals but had minimal impact elsewhere as the US took its cues from domestic earnings and economic news and Europe listened to bond markets. Apple's after-market report is the icing on the cake - shares in the world's second-largest company by market cap are strongly ahead, which suggests further gains to come tonight on Wall Street. That prospect may stop many traders from closing positions this afternoon ahead of tomorrow's Anzac Day holiday. Goldman Sachs advised clients to close gold shorts overnight, but that didn't do much for the metal or for US miners. Still no sign of a bottom in copper.
ECONOMIC NEWS: The quarterly consumer price index and trimmed mean CPI are due at 11.30am EST. Tonight's US highlights include: durable goods orders/core durable goods and crude oil inventories.
