** 1612/10 - 9.01am - by James Gerrish**
US stocks were pretty flat to marginally weaker last night with the DOW JONES down -19 points or -0.17% to close at 11457. In London, the FTSE 100 fell -9 points or -0.15% to 5882. Locally, SPI FUTURES are pricing a drop of -13 points when trading kicks off this morning.
We've seen a number of indices break up above the November highs - the S&P 500 is probably the most notable with the DOW JONES following suit 2 nights ago - although it was somewhat unconvincing if you look at it in isolation. One other important index that I like to keep an eye on is the DOW TRANSPORTS. This tracks the transport stocks on the US market and is often a pretty good precursor or leading indicator for the Industrials.
The leading nature of the index has been evident over the past couple of weeks and this has pre empted the move in the broader market. It generally rises when underlying economic data is getting better (and we've seen this lately) and if you get right down to the coal face, it benefits from a rise in the movement of goods around the US. It supports our view of an improving US economic situation.
Looking at the commodity markets last night, we saw a drop pretty much across the board in base metals and this will be a negative lead for our market - particularly the miners. 6 sessions in a row where the markets have risen, I think probably time for some consolidation before heading higher.
James Gerrish
(02) 9375 0112
