Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Shares are primed for a new six-and-a-half-year high after US stocks rose to record levels as Federal Reserve chair Janet Yellen cooled rate expectations and Europe approved a debt extension for Greece.
The March SPI 200 futures contract rallied 25 points or 0.4% to 5910, pointing to a share market open at a level last seen in May 2008. Market heavyweight BHP jumped 6.24% in UK trade and 5.57% in the US after beating half-year profit expectations and raising its interim dividend.
US stocks extended their record run as Fed chief Yellen virtually ruled out a rate increase before mid-year, pledging to be "patient" amid low wage growth and sluggish inflation. The S&P 500 advanced six points or 0.28%. The Dow outperformed the broader market with a rise of 92 points or 0.51% after Home Depot's profits exceeded analysts' targets. The Nasdaq put on seven points or 0.14% for a 10th straight gain.
Yellen told the Senate Banking Committee that the Fed's rate plans remain dependent on economic dataflow, but emphasised that the central bank's commitment to be "patient" means no rate rise for “at least the next couple” of meetings.
“We have some more time where rates are not going to change dramatically over the near-term,” Bill Schultz, chief investment officer at McQueen, Ball & Associates in the US, told Bloomberg. “The market’s interpreting it as a continuation of policy until proven otherwise - going to need to see continued evidence, job growth, inflation or economic growth picking up before they’re going to change their forward guidance.”
Market sentiment was also helped by reports that European finance ministers have approved economic reform proposals submitted by Greece as a pre-condition of securing a four-month extension to its bailout deal. The bailout extension now requires approval at parliamentary level in several euro-zone countries. The approval came despite reservations voiced by IMF chief Christine Lagarde and ECB President Mario Draghi over a lack of detail in the proposal. Read more here. News of the extension helped the Stoxx Europe 600 rise 0.56% to a new seven-year high as Germany's DAX rallied 0.67% and France's CAC 0.49%. Greece’s Athex Composite soared 9.81% to its highest level since December.
BHP was the driving force behind a 0.55% advance on Britain's FTSE. Rio Tinto added 1.75% in US trade. Iron ore trade in China remained suspended yesterday for the Lunar New Year holiday, but resumes today.
Copper jumped to a six-week high as Yellen's testimony pushed the US dollar lower and traders prepared for the return of Chinese buyers. In London, copper rose 2%, aluminium 1.1%, lead 0.6%, nickel 1.6%, tin 0.6% and zinc 1.4%. US copper for March delivery was recently up 2% or more than five cents at US$2.65 a pound.
Gold settled below US$1,200 an ounce but trimmed its loss as some traders interpreted Yellen's remarks as less bearish for the metal than anticipated. Gold for April delivery settled $3.50 or 0.3% lower at US$1,197.30 after earlier trading towards US$1,190.
Oil declined for a third night ahead of US inventory data. West Texas Intermediate crude oil fell 17 cents or 0.3% to settle at US$49.28 a barrel.
The dollar was this morning buying 78.31 US cents.
TRADING THEMES TODAY
MINERS TO LEAD: BHP's interim result drew a round of applause around the world overnight, with the share price surging in both the UK and US. That suggests further gains here today. Improvements in base metals overnight should help other resource stocks. Financials were also strong in the US. China re-opens for business today, with HSBC's flash factory update at 12.45pm EST likely to have a say in how this session finishes up. But whatever that brings, momentum on the ASX is strong, the broad market trend is up, select specs are firing - there is plenty to like.
ECONOMIC NEWS: The quarterly wage price index and construction work data are due at 11.30am EST. However, the day's main event is likely to be HSBC's preliminary Chinese manufacturing update at 12.45pm. The Shanghai Composite re-opens today. Fed chief Yellen is back in front of a committee tonight - this time the House Financial Services Committee. Other US highlights are new-home sales and crude oil inventories.
