Morning traders. Thanks Shants and after-market regulars. A shout-out to Trees.
Market wrap:
The share market is aiming higher after strong property sales helped US stocks snap a three-day losing run with their biggest rally in more than a month
The December SPI 200 futures contract bounced 22 points or 0.4% to 5401 as the S&P 500 retained its record of not declining for more than three consecutive sessions this year. BHP, Rio Tinto, oil and base metals all rallied.
The S&P 500 advanced 15 points or 0.77% for its strongest rise since August 18 as traders once again 'bought the dip'. The Dow put on 154 points or 0.9% and the Nasdaq added 46 points or 1.03%.
“We had three down days in a row, but the size of the home sales increase was a surprise,” Richard Sichel, chief investment officer at Philadelphia Trust in the US, told Bloomberg. “Stocks being cheaper than they were a few days ago prompted some buying. Stock performance this year has been good because dips haven’t lasted very long.”
Sales of new family homes jumped 18% last month to their highest level in at least six years, according to a Commerce Department report. The seasonally-adjusted annual rate soared to 504,000 from an upwardly revised 426,000 in July. Economists had anticipated a rate of 426,000, according to MarketWatch. Read more here.
Also helping market sentiment were dovish speeches by two members of the Federal Reserve. Fed Bank of Chicago President Charles Evans said raising rates prematurely was the biggest risk to the economy and the central bank should be "exceptionally patient in adjusting the stance of US monetary policy". Read more here. Fed Bank of Cleveland President Loretta Mester said the central bank needed to communicate its policy intentions better so markets were better informed.
Nine out of ten S&P industry groups advanced. Health stocks bounced 1.7% after two days of falls following a crackdown on merger activity allegedly prompted by tax manipulation. Consumer stocks were boosted by a bullish forecast for US holiday sales from tax and accounting experts Deloitte.
European stocks rallied as traders bet that a slump in German business confidence added to pressure on the European Central Bank to take aggressive steps to reinvigorate a faltering euro-zone economy. The closely-followed Ifo business climate index slid to a 17-month low last month, prompting the president of the Ifo Institute to warn that the "German economy is no longer running smoothly”. The Stoxx Europe 600 index rose 0.72% as Germany's DAX gained 0.7%, France's CAC 1.25% and Britain's FTSE 0.45%.
BHP added 1.19% in US trade and Rio Tinto 1.63% after the price of iron ore stabilised yesterday. Spot ore for import to China was steady at a five-year low of US$79.40 a dry tonne.
Oil extended Tuesday night's rally following an unexpected dive in US inventories to an eight-month low. West Texas Intermediate crude oil for November delivery advanced $1.24 or 1.4% to settle at US$92.80 a barrel.
“We have a four-million-barrel decline, and that’s pretty serious,” Michael Lynch, president of Strategic Energy & Economic Research in the US, told Bloomberg. “It should be a bullish report for WTI. Globally the market is bearish because of concerns about Europe and China.”
Copper recovered from a three-month low and nickel from its weakest point in five months. In London, copper gained 0.4%, nickel 1.61%, aluminium 0.46%, lead 1.06%, tin 0.47% and zinc 1.2%. US copper for December delivery was recently up two cents or 0.6% at US$3.05 a pound.
Gold gave up Tuesday night's shallow gains as a rising US dollar dampened demand for other stores of wealth. Gold for December delivery dropped $2.50 to settle at US$1,219.50 an ounce and was lately trading at US$1,217.50.
The dollar was this morning buying 88.88 US cents.
TRADING THEMES TODAY
REBOUND: Bulls can breathe a sigh of relief this morning after Wall Street demonstrated that 'buying the dip' is alive and well. The S&P 500 has not declined for four nights in a row since December, an extraordinary record compared to the ASX. Oh to trade a market as reliable as the US... Back home, we can take succour from the overnight bounce in the big two miners and in advances in base metals and oil. WTI has put in what might prove to be a 'higher low' this week, hinting at a genuine reversal following a three-month decline. Glenn Stevens has another opportunity to talk down the dollar around lunchtime (see below), although he must be happy with the way it is heading right now. The housing market looks like his next target.
ECONOMIC NEWS: RBA Governor Glenn Stevens is due to address the Melbourne Economic Forum at 12.30pm EST. The US has some meaty data scheduled tonight, including durable goods/core durable goods, weekly benefit claims and the flash services PMI.
