The share market is primed for a fifth straight rise after US stocks pushed higher overnight and a rebound in commodities accelerated.
The June SPI 200 futures contract rallied 12 points or 0.2% to 5127 this morning, extending Wednesday's gains as the big Australian miners logged their second advance in US trade while the ASX was closed for the Anzac Day public holiday.
The S&P 500 put on six points or 0.39% overnight as jobless claims fell and the corporate earnings season continued to deliver enough upside to revive the market following a flat close yesterday morning. The Dow pared a 90-point rise to a final gain of 25 points or 0.17%, leaving it slightly lower for the Anzac Day holiday period after a 43-point drop yesterday.
"The majority of companies are continuing to beat expectations, so that's a good sign," the co-chief investment officer of Oakbrook Investments in the US told Bloomberg. "The jobless claims were better than expected, so that's providing some support."
First-time applications for unemployment benefits declined by 16,000 to 339,000 last week. Economists had anticipated a much smaller drop to 350,000 after recent signs of weakness in the labour market.
A broad rally saw all 10 S&P industry groups advance as companies as varied as UPS, Cliffs Natural Resources and Akamai Technologies beat profit expectations. BHP and Rio Tinto enjoyed a second night of gains as the mood on commodity markets continued to improve. BHP advanced 0.51% overnight following a 2.67% jump on Wednesday. Rio backed up Wednesday's 4.16% surge with a gain of 0.82% overnight.
US stocks pared gains overnight after a newspaper said Germany's central bank opposes a key element of the European Central Bank's bailout plan for debt-laden European countries. A German daily said Bundesbank President Jens Weidmann told Germany's constitutional court the bank opposed the ECB's plan to buy government bonds from countries that apply for a bailout. Earlier, European markets closed mixed as Britain avoided a triple-dip recession with a GDP gain of 0.3% last quarter. Britain's FTSE edged up 0.17%, Germany's DAX gained 0.95% and France's CAC dipped 0.08%.
Gold's recovery accelerated overnight with the metal's biggest rise this year. Gold for June delivery was lately up $44.80 or 3.2% at US$1,468.60 an ounce after adding $14.90 or 1.1% on Wednesday. May silver surged 6.2% or $1.42 to US$24.25 an ounce overnight, its strongest close in roughly two weeks.
Copper rallied for a second night to reach its highest point in a week. US copper for May delivery was recently up nine cents or 2.8% at US$3.25 a pound after bouncing six cents or 2.1% on Wednesday night. In London overnight, copper put on 2.1%, aluminium 1.5%, lead 1.4%, nickel 0.9%, tin 1% and zinc 0.8%.
"All the signs suggest to me that there is some very, very good buying coming out of China, and it's probably the end-users taking advantage of very low copper prices to rebuild their inventories that have been at extremely low levels," the head of commodities research at Natixis in London told Reuters. "There are reports of falls in [Chinese] bonded warehouse stocks, very high trading volumes, a significant increase in open interest [in China] and a rise in physical premiums."
Oil settled at its highest level in two weeks, supported by a falling US dollar and signs of economic revival in the UK. West Texas intermediate crude for June delivery was lately up $1.85 or 2% at US$93.27 following a Wednesday night rise of 2.5%.
TRADING THEMES TODAY
COMMODITY REBOUND ACCELERATES: Wall Street hasn't done a great deal over the Anzac Day holiday, but commodity markets have bounced hard, with reflected gains for Rio and BHP. Barring surprises, that should be enough for a fifth up-leg on the ASX today. Copper finally joined the commodity rebound that began with precious metals and dragged along oil and now base metals. This week's brutal falls in domestic gold miners suggest plenty of institutional money thinks the rebound is no more than a dead cat. Time will tell. Shanghai remained weak yesterday, falling 0.87% despite gains elsewhere in Asia. Given the nice rally into Wednesday's ASX close, I won't rush to buy this morning's open - fair chance of profit-taking on any gap higher, in my opinion - but opportunities should emerge as the day progresses.
ECONOMIC NEWS: No significant domestic news scheduled today. Japan has a heavy schedule, including manufacturing, inflation and a Bank of Japan rate decision and statement. US highlights tonight include advance quarterly GDP data, advance GDP price index and revised consumer sentiment and inflation expectations.
