Australian shares recouped most of yesterday's losses ahead of this afternoon's rate decision as US futures signalled an uptick in global economic optimism.
At lunchtime the ASX 200 was 70 points or 1.5% ahead at 4780 after earlier running as high as 4803 as a broad rally lifted all sectors. Resource stocks led the rally, with gold jumping 6.1%, metals & mining 3% and energy 2.7%. The rally came after manufacturing reports from Europe and the US last night suggested a pick-up in demand.
"These are good signs for the world's two largest-consuming regions. The fact Europe looks like normalising and could emerge from what is a record-long recession for the region will be a massive benefit to the global economy," IG Markets strategist Evan Lucas told MarketWatch.
US futures shrugged off a mixed morning in Asia. Dow futures were recently up 28 points or 0.2%. Shanghai dipped 0.4%, Hong Kong's Hang Seng resumed trade following yesterday's public holiday with a fall of 0.32% and Japan's Nikkei advanced 1.06%.
Crude oil futures retreated 18 cents this morning to US$97.90 a barrel. Spot gold was $5.30 firmer at US$1,257.30 an ounce. The dollar was buying 92.2 US cents.
Everything except the SPI pointed to this sort of rally today. It's not often the futures market gets it that wrong. I took AQA just after the open but should have trusted my instincts and grabbed a lot more. Added CDB later. Now bring on the RBA. This seems as good a time as any to mention I'll be taking off on Friday for a few weeks to recharge the batteries. Be great if we could lock in a couple of volunteers to launch the pre-market and afternoon threads. Any takers please? You don't have to do much of a song and dance - just turn up each day and get the date right in the subject line more often than I do.
