06/10/09 - 09:30
Ben Potter - Research Analyst, IG Markets
Overnight Market Report - 9.30am
On Wall St overnight, upbeat broker comments and positive economic data drove the indexes higher with the S&P 500 rising 1.5% to 1040.5.
In trading action, the S&P 500 opened at a session low of 1026 and rallied throughout the session, hitting a high of 1043 before closing at 1040.
Given offshore leads, the S&P/ASX 200 is called to open 43 points or 0.9% stronger at 4617.
Sector leads
Materials sector
Base metals were mostly higher in London Metals Exchange trade overnight with Copper and Nickel rising 1.7% and 1.8%, while Zinc finished flat and Aluminium was lower by 0.7%. Rio Tinto and BHP Billiton both added on the session, up 2.3% and 2%. In US trade, the S&P Basic Materials sector gained 2% with Freeport McMoRan up 2.2% and Alcoa 4.7%. The CRB Commodity Index was 1.3% stronger.
Given the leads, we’ll likely see solid buying pressure return to the materials sector.
Energy sector
Crude Oil futures finished higher in overnight trade, back above the $70 per barrel level after an upbeat survey of the US services sector lifted hopes for economic recovery.
The S&P Oil & Gas sector added 2.2% with Chevron gaining 1.8% and Exxon Mobil 1.5%. In London trade, BP was flat while Royal Dutch Shell was down 0.2%.
Given the solid overnight leads, we expect to see some buying return to the energy sector, especially following a sector wide upgrade from Credit Suisse yesterday.
Financials Sector
The S&P Financials sector and the KBW Bank Index both had very strong nights, up 3.3% and 3.2% respectively. JPMorgan was the best performer, gaining 4.6% while Goldman Sachs (3.8%), Citigroup (3.3%) and Bank of America (3.8%) all added significant points after Goldman Sachs upgraded the big name banks on expectations they would outperform their smaller peers.
Given the strong leads, we’ll likely see the Australian financials sector well bid today.
In summary, it’s likely to be a strong day for equities, although there could be some nervousness ahead of the RBA’s interest rate decision at 2.30pm.
Economic news
Asia
- AU - Trade Balance 11.30am
- AU - Cash Rate & RBA Statement 2.30pm
Europe
- UK - Halifax HPI m/m 7pm
- UK - Manufacturing Production m/m 7.30pm
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