– The Bulls have it. Another night, another all time high in the Dow and the S&P 500 which were bid higher on the back of broker upgrades in mining and banking sectors, according to Craig James at CommSec. At the close, the Dow finished up 112 points or 0.67% 16,695, the Nasdaq ripped higher up 1.77% to 4,144 and the S&P 500 rose 0.99% to 1,897, just shy of the next big level at 1,900.
– It’s a truly amazing market – all manner of pundits suggest it is overvalued but not Morgan Stanley, who make an argument for being bullish in this piece by BI US colleague Joe Weisenthal. It’s worth a read and it’s still all about free money and low rates.
– In Europe, shares were also higher after strong profits from Italian companies and the ebullient tone from Wall Street. At the close, the FTSE 100 rose 0.55% to 6,852, the DAX rose 1.26% to 9,702 while in Paris the CAC was 0.37% to 4,494. Milan and Madrid were relatively subdued, rising just 0.49% and 0.76% respectively.
– Of course the net result on the Australian market has been positive in overnight futures trade on the ASX, with the June SPI 200 contract up 30 points to 5,466 bid and a bias to head higher in today’s trade regardless of the budget.
– In Asia yesterday, the package on financial deregulation released in China over the weekend saw the Shanghai exchange rally 2.08% as the government pulls back the regulatory constraints the markets have been operating under. Elsewhere, the Nikkei fell 0.35% after the Japanese trade data disappointed yesterday but stocks in Hong Kong surged on the Chinese package rising 1.83%. Today, Asian markets will be watching Chinese retail sales and industrial production.
– On Currency markets, euro consolidated Friday’s fall and sits at 1.3758 this morning; the pound rallied above 1.69 at one point but couldn’t hold there and sits at 1.6866, while USDJPY is back above 102 at 102.11 this morning. The Aussie is becalmed after a run at 0.9385 and is back basically unchanged on the day at 0.9360.
– In Commodity Land, Nymex Crude is up 0.63% to 100.62 Bbl and Gold recovered from early Asian selling yesterday to rally $8.60 oz to $1,295 this morning. Copper fairly surged up 6 cents to $3.16 or 1.92% – that has to help some miners on the ASX this morning – while the Ags continue to love volatility with Corn, Wheat and Soybeans all down more than 1%.
Today we get Australian home prices and investment lending before the budget tonight – which doesn’t usually move markets. Then it’s German WPI and ZEW Economic survey tonight together with Italian CPI. In the US, retail sales will be important as will import and export prices along with business inventories.
Here is CMC Markets’ Stock To Watch from chief market analyst Ric Spooner:
Rail operator, Aurizon Holdings was in the news last week announcing it has joined Chinese company Baosteel in a bid for Aquila Resources. Its involvement is aimed at securing the right to develop and operate the railway and port infrastructure required for Aquila’s West Pilbara iron ore project to proceed. In the meantime, Aurizon also announced yesterday that it has applied to terminate 14 Queensland Enterprise Agreements with its workforce as it seeks to improve efficiency and reduce costs in existing operations.
With all this action, the price charts might provide some useful benchmarks for traders and investors looking to finesse their reactions to what’s going on in with this company,
- On the immediate horizon, price has fallen to its 200 day moving average. A clear break below this would be a sign of further weakness
- Last week’s takeover bid saw price break significant trend line support around $5.04. This area and the gap just above it may now act as overhead resistance if things go the other way and there is a bounce off the 200 day moving average.
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