03/09/10 - 09:00
Ben Potter, Research Analyst
Overnight Market Report - 9.00am
In US trade overnight, stocks rose, adding to their biggest gain since July as a surprise jump in home sales and a better-than-expected jobless claims number tempered fears the economic recovery is weakening. Last night’s positive data, coupled with the good manufacturing figures seems to have eased concerns over the economy.
The NASDAQ was the top performer overnight, rising 1.1%. The S&P 500 closely followed, up 0.9% while the Dow Jones Industrial Average could only manage gains of 0.5%.
Locally, the ASX 200 is called to open 0.8% firmer at 4568 following the positive US session.
We should see strong gains across our heavily weighted sectors today. The industrial and financial sectors should be well supported after their US counterparts added 1.4% and 1% respectively.
A gain of 1.1% for the US basic materials sector should also see local material names outperform. The leads from the London Metals Exchange were supportive too, with all base metals up between 0.3% and 1.9%. However, Rio Tinto and BHP retreated in normal London trade, declining 0.5% and 0.1%. Nonetheless, BHP’s ADR is still pointing to a 0.5% gain on the open.
Energy names should also have a good session after the sector added 0.9% in US trade. A gain of 1.5% to US$74.96 for crude oil futures will help spur buying interest.
In summary, we should see broad-based gains on the open. However, from there we’re likely to be prone to some profit taking, especially given the market is up 3.7% since Thursday. Couple that with the release of non-farm payroll numbers tonight and the Labor Day long weekend in the US, and it wouldn’t surprise us at all if we drifted lower from morning highs.
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