**11/11/10 - 9.11am - by James Gerrish**
The US market closed marginally higher overnight after dropping -91 points in early trade. It was actually a very strong recovery late in the day to see the index close well off its intra session lows. There is still concern floating around about European debt issues (nothing really new) and no doubt there was some profit taking from the recent rally. We/re yet to see any sustained (high volume) selling in the US over the last couple of days with the market really drifting more than anything.
Its been interesting to see that Financial and Energy stocks have been the best performing areas this month. They were the sectors to lag last month so we're seeing some rotation here. This hasn't been the case on our market as Woodside has struggled after Shell sold its stack (I actually think this was a positive and we would have seen the stock rally - we haven;t as yet) and there has been continued anger over the banks move on rates. The main issue here is the impact that any Government move will have on the sector and this has got investors a little concerned. There is no doubt its got the banks concerned as well given their move to cut exit fees on mortgages in an attempt to appease the Govt.
On the market last night, the DOW JONES finished up +10 points or +0.09% to 10357. In London, the FTSE closed down -58 points or -0.99% to 5816. Locally, SPI FUTURES are suggesting a rise of 30 points when trading kicks off this morning.
One of the main aspects of US economic data that I believe is of critical importance is unemployment. A large proportion of US economic woes are derived from high unemployment. Any data that shows improvement here is a positive. Last week we saw the Non-Farm payrolls data came in better than expected. Overnight, data showed the number of initial jobless claims fell to the lowest level in four months. These are small signs of improvement however there is a trend thats developing. I do think the US economy has turned the corner.
For mine, there appears to be some further upside in the market. Resource stocks are looking a little overheated and this may be an area where profit taking occurs. This will be driven by the USD.
James Gerrish
(02) 9375 0117
