– Woo Hoo, slam dunk – it’s all good. Forget the last week’s worries, they can all be left behind as stocks in Asia and Europe ripped higher to play catch up to the US moves they missed on Friday night and the positive tone filtered back into the US session in a loop that took US stocks higher still.
– The volatility at the moment both down and up is as much a warning of growing instability in markets as it is that underlying buying continues in stocks. For today though, the buyers have it.
– So at the close the Dow was up 16 points of 0.10% to 16,570, the Nasdaq lead the way with a gain of 0.69% to 4,401, while the S&P 500 is up 5 to 1,937 for a gain of 0.28%. Here is what our BI US colleagues think are the key US specific points from overnight trade.
– In Europe it was champagne and caviar all around as stocks played catch up to the US recovery on Friday and then positivity last night. The FTSE was 1% higher to 6,633, the DAX fairly roared up 1.91% and the CAC rose 1.21%. Stocks in Milan were up 1.39% while those in Spain rose 0.88%.
– Asian stocks yesterday were on a tear as well with the Nikkei up 2.39% to 15,131 – that’s a huge move for a developed market in one day, and even though it’s an up not down move, traders will be a bit leery of that one. Hong Kong traders were positive as well bidding the Hang Seng up 1.29% while in Shanghai stocks rose 1.39%. Asia was positive because the US was strong but equally the Chinese CPI over the weekend at just 2.3% year-on-year was very benign – which is a good thing for the Chinese economy.
– On the ASX yesterday it was a good day with the physical index up 0.4% but four stocks including BC Iron and JB HiFi (see Ric Spooner’s stock to watch below) still managed falls of more than 5%! Overnight on the futures market the SPI 200 September contract rose 20 points to 5,414.
– On interest rate markets the big story is there is no story. Another warning to ebullient champagne drinking stock traders perhaps? US 10 year rates were unchanged at 2.43%, German 10 year Bunds rose a point to 1.06% while Gilts lost 3 pips to 2.49%.
– Likewise the world’s biggest macro market – foreign exchange – was very quiet perhaps signalling another warning to stock traders despairing one day and celebrating the next. The US dollar reversed some of Friday’s losses.
– The Euro fell around 30 points from the high to 1.3384 this morning. Sterling is at 1.6785 and USDJPY at 102.18. The Aussie has slipped back just a smidge to 0.9260.
– On commodity markets September iron ore futures fell 25 cents to $94.50 a tonne. Newcastle coal for the same month dipped 10 cents to $71.65.
– Nymex crude is up 22 cents a Bbl to $97.87, gold is calm at $1,309 an ounce with silver back over $20 at $20.02 while copper is at $3.19 a pound. On the Ags wheat dipped 0.66% but corn was up 1.31% and soybeans unchanged.
Data wise today we get the latest update of the ANZ-Roy Morgan weekly consumer confidence survey before the NAB Business Survey and house price index. Industrial production in Japan is out and important for Abenomics and then italian CPI, the ZEW business survey in Germany and the NFIB business index in the US tonight.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
JB Hi Fi achieved a profit result for F14 near the top end of its guidance range. This was thanks in part to an increased profit margin on its sales. What concerned the market though was a pretty modest forecast outlook for next year. JBH is forecasting sales growth of only 3.5%. The New Year has got off to a rocky start with comparable sales store growth of negative 5.5% in July.
The $17.50/.60 zone has now proved to be support for this stock on five occasions this year. It remains to be seen though whether yesterday’s low will be the end of things this time around. From a chartist’s point of view, the price gaps before the last two days’ candles are a worry. They look like the sort of breakaway and continuation gaps often associated with an impulsive downtrend. Any quick move to fill the first gap above $18.46 might provide bulls with a bit more comfort.
You can follow Ric on Twitter @ricspooner_CMC
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