Bright global economic news has Australian shares aiming higher despite a mixed session on Wall Street as Apple crashed more than 12%.
The March SPI 200 futures contract rallied 16 points or more than 0.3% to 4797 as oil, iron ore and most industrial metals benefitted from improving economic signals from China, Europe and the US in the last 24 hours.
The benchmark share indexes in the US diverged sharply as traders digested Apple's disappointing fourth-quarter profit report, released yesterday morning Australian time. The Dow, which doesn't include the iPhone maker as a component, rallied 46 points or 0.33%. The S&P 500 and the Nasdaq, both of which include Apple at significant weights, added 0.01% and lost 0.75%, respectively, as Apple plunged 12.36%. The S&P 500 briefly broke above 1,500 for the first time in five years, sagged mid-session and then staged a shallow recovery to secure a seventh straight gain for the first time in six years.
Apple's swan-dive was a distraction from an upbeat round of economic reports in the US and Europe following yesterday's strong Chinese manufacturing data. Jobless claims in the US fell to their lowest level in five years, manufacturing activity recorded its strongest growth in nearly two years and an index of leading economic indicators beat expectations. In Europe, an index of private-sector activity improved to 48.2 from a December reading of 47.2, the best result in 10 months. The news helped Germany's DAX put on 0.52%, France's CAC 0.69% and Britain's FTSE 1.09%.
"The claims numbers are clearly a big surprise and were very good numbers - they imply we may have a good employment number for the month of January," the chief investment officer of Hugh Johnson Advisors in the US told Reuters. "You have Apple and technology on the one side and the rest of the market on the other side."
Rio Tinto continued to rebound in overseas trade overnight as the price of iron ore inched higher yesterday. The Metal Bulletin Iron Ore Index advanced 22 cents to US$149.21 per tonne. Rio put on 2.11% in UK trade and 0.52% in the US. BHP added 1.35% in the UK but dipped 0.14% in the US.
Oil took its cue from the upbeat economic news, shrugging off an increase in US weekly inventories. West Texas crude for March delivery was lately up 75 cents or 0.8% at US$95.98 a barrel.
Silver broke its seven-session winning run and gold slipped for a second night as the improving global economic picture undercut demand for safe havens. Silver for March delivery was lately down 76 cents or 2.4% at US$31.68 an ounce. Gold for February delivery was off $19.70 or 1.2% at US$1,667.
Copper succumbed to the uncertain mood on Wall Street after earlier inching higher in London. US copper for March delivery was recently down one cent or 0.3% at US$3.67 a pound. In London, copper edged up 0.1%. Aluminum, lead, zinc and tin also moved higher in London. Nickel retreated.
TRADING THEMES TODAY
EXTRAORDINARY TIMES: Subtract Apple from the overnight action in the US and you're looking at another pretty good night. The economic news was overwhelmingly optimistic, suggesting the global economy is slowly pulling out of its long post-GFC malaise. It's that expectation that has helped Australian share indices advance in a virtually unbroken line for three months. The S&P 500's first seven-session winning run in six years indicates there's something pretty unusual going on here. These are abnormally calm trading conditions - very forgiving. Near-term, I can't see a catalyst for a pullback but you can bet that something will develop. Until then, let the hay-making continue.
ECONOMIC NEWS: No significant domestic news scheduled today. Europe has British GDP and the closely-watched German Ifo business climate data tonight. It's day three of the World Economic Forum in Davos. The highlight of a thin schedule in the US is new home sales.
