Australian shares this morning hit their highest level of the week as traders anticipated central bank meetings next week that may produce further quantitative easing.
At lunchtime the ASX 200 was ahead 36 points or 0.9% at 4184 after earlier pushing just above where the market began Monday's sharp sell-off. A broad rally pushed all sectors higher except the defensive utilities (-0.45). Gold +2.4%, metals & mining +1.4% and financials +1.1% were the stand-outs.
The rally came after European Central Bank President Mario Draghi last night pledged to do "whatever it takes to preserve the euro", raising hopes ahead of central bank policy meetings next week in the US on Tuesday/Wednesday and Europe on Thursday.
"There's a fear things are getting out of control, and so Draghi came out with a very strong statement in support of the market that they are going to do everything necessary to support the euro," Cameron Peacock, market analyst at IG Markets, told Bloomberg. "Everyone wants to see the Fed embark on a third round of quantitative easing. It's going to provide a temporary boost to the stock market, it's going to push up commodity prices and it's going to lower the US dollar."
Asian markets followed European and north American markets higher. Japan's Nikkei put on 1.4%, Shanghai 0.38 and Hong Kong's Hang Seng 1.94%. Dow futures were recently up four points or less than 0.1% despite poorly-received earnings from Facebook and Starbucks this morning.
Crude oil futures edged up seven cents this morning to US$89.60 a barrel. Spot gold added 50 cents at US$1,615.30 an ounce. The dollar was buying $US1.0414.
The prospects look good for a few days of gains ahead of next week's Fed and ECB policy meetings, allowing the XJO room to set a new higher high and maintain its developing up-trend. As charts go, it's one of the better-looking ones out there. Congratulations once again to long-term holders of SIR. The company has done the entire market a favour by proving that there are still fortunes to be made in stocks. Let's hope that translates into better participation rates in the months ahead. Still, I left the share alone this morning - will wait for a decent pullback before considering another entry. Took a little off the table in GXY from last week. Holding some for next week.
