daytrading july 2 afternoon

Thanks Endless.

Half-time round-up:

Australian shares are on track for their strongest close in six weeks, outperforming most regional counterparts as a generally positive round of economic data bolstered optimism over Europe's latest sovereign debt breakthrough.

At lunchtime the ASX 200 was ahead 48 points or 1.2% at 4142 with all sectors except the defensive health (-0.6%) and utilities (-0.1%) adding to Friday's gains. Gold +2.8% and energy stocks +2.1% were the morning's big winners after substantial rises in gold and oil in overseas trade on Friday.

"There seems to be a genuine stronger feeling in the markets this time that European policy makers really have taken stronger and more courageous moves this time around, which hopefully will give them a lot more breathing space to build on the measures announced," an economist at IHS Global Insight told MarketWatch.

This morning's advance came in spite of soft US futures and a mixed morning in Asia. Japan's Nikkei rallied 0.16% after the closely-watched Tankan survey of business sentiment improved from -4 to -1 last quarter. Hong Kong's Hang Seng jumped 2.29% but Shanghai eased 0.2% as HSBC's final manufacturing survey showed little change from the "flash" or preliminary reading released last week. The final reading, unveiled this morning, was 48.2, up 0.1 points from the flash reading and 0.2 points weaker than May's final reading. Dow futures were recently down 24 points or 0.2%.

The morning's domestic economic news was mostly positive, with house prices bouncing higher, manufacturing improving from weak levels and inflation falling further below the Reserve Bank's target range. House prices in capital cities improved by 1% last month, their biggest jump in more than two years. A measure of manufacturing rallied 4.8 points to 47.2 but remained below the 50-point level that separates contraction from expansion for a fourth month. The monthly inflation gauge fell 0.2% in June to bring the annual rate down to 1.6%, the weakest reading since 2009.

Crude oil futures this morning gave back some of Friday's extraordinary 9% surge, falling 80 cents to US$84.04 a barrel. Spot gold was $7.30 softer at US$1,591.30 an ounce. The dollar was buying $US1.0221.


So far, so good. The XJO built steadily through the first half of the morning but is struggling to hold its gains as Shanghai weakens and US futures wobble. The temptation to lock in profits ahead of the July 4 holiday was too much for oil and gold traders this morning. Will equities follow suit? Unfortunate timing for a holiday. I'm more confident buying pullbacks than up-gaps, so the morning offered limited opportunities. SBM was worth a look after two days of heavy selling but the bears have capped the rebound thus far.