Markets shake off mixed data
October 4th, 2010 by Cale McCulloch
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,829.68 | 41.63 | 0.4% |
| NASDAQ | 2,370.75 | 2.13 | 0.1% |
| S P 500 | 1,146.24 | 5.04 | 0.4% |
| FTSE 100 | 5,592.90 | 44.28 | 0.8% |
| Nikkei 225 | 9,404.23 | 34.88 | 0.4% |
| ASX 200 | 4,579.20 | -3.7 | -0.1% |
| COMEX Gold - Dec 09 | 1317.8 | 8.2 | 0.6% |
| COMEX Silver - Sep 09 | 22.06 | 0.239 | 1.1% |
| COMEX Copper - Sep 09 | 369.05 | 3.9 | 1.1% |
| WTI Spot | 81.58 | 1.61 | 2.0% |
| AUD-USD | 0.9725 | 0.0052 | 0.5% |
| Aluminium | 2,345.00 | 31 | 1.3% |
| Copper | 8,115.00 | 61.5 | 0.8% |
| Lead | 2,276.50 | 14.5 | 0.6% |
| Nickel | 23,775.00 | 385 | 1.6% |
| Tin | 25,050.00 | 400 | 1.6% |
| Zinc | 2,193.00 | 17 | 0.8% |
US stock markets rallied despite a spate of mixed economic data Friday night. On the economic front we had the ISM manufacturing purchasing managers index falling to 54.4 from 56.3 in August which was broadly in line with the average estimate of analysts, although weaker than August it is important to note that a reading above 50 shows expansion. We also had some better than expected data released on personal income and spending which has been the real concern for the US economy given consumers drive some 70% of US economic activity, but what really boosted the market was some positive Chinese manufacturing data which brought buying into the materials and energy sectors in particular. At the bell the Dow was higher by 42 points, or 0.4% at 10,830, the S&P500 gained 0.4% as well to 1146, while the Tech heavy NASDAQ Composite managed only slight gains of 0.1% to close at 2371.
Commodities found strong support on Friday on the back of the Chinese data released during the Asian session, with all of the base metals managing gains of up to 2.7%, while Oil climbed some 2% to close at USD 81.58 per Barrel. Gold continued its climb, setting one record after another and managing to hold above 1300 for the week, closing at USD 1313 a Troy Ounce. The strength in commodities will flow through the local market today, as we should see some of the risk that has come off the table in recent trading sessions come back on, with the likes of BHP, RIO, WPL and OSH all looking like driving gains when the market opens this morning.
Domestically this week all eyes will be on the RBA rate announcement Tuesday afternoon (2.30 AEDT), although a rate rise may be unlikely at this stage given the modest expansions of credit and mortgage lending, inflation being at the upper end of the RBA’s target band will undoubtedly have the board keeping it on the cards for future months. The AUD/USD will be looking to the RBA for direction, after closing above 97c for the first time since July 2008. Although we may see some consolidation without a rate rise this week, the risk on trade and the strength in commodities, not to mention the relative strength of the Australian economy and prospects of more rate rises in the future ahead of trading partners should see the AUD test parity with the USD medium term anyway.
The market look set to gain this morning, with the SPI tracking higher by about 25 points when it closed Saturday morning (locally), but given the markets tendency to sell down through the day last week as risk came off the table, traders will be watching Asian markets closely for direction. A reversal of this trend and renewed buying in the afternoon may give a strong signal that the market has had its pull back and is ready for another leg higher, but I would suggest waiting for this trend to reverse before getting involved.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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