Morning Note - Market rallies on strong data + ECB rates chat

by James Gerrish 04 March 2011

** 04/03/11 - 9.13am  -  by James Gerrish** 
 
  • A strong rally in global markets last night with a string of positive economic releasesprompting some quite aggressive buying. 
  • 2 days ago I was a little surprised to see the market down more than 160 points when both retail sales + manufacturing data was positive. The focus then was on the oil price but last night the oil price took a back seat. 
  • Buying was supported last night by a strong employment number as jobless claims fell more than expected. This sets up for a positive print on Non-Farm payrolls tonight with the market expecting +180,000 jobs being created last month (consensus range 120,000 to 255,000). 
  • This goes against +36,000 jobs created in January so if we do get what we’re expecting, the trend is certainly going the right way
  • The DOW JONES added +191 points or 1.59% to close at 12258. 
  • In London, the FTSE 100 added +90 points or +1.52% to close at 6005. 
  • Locally, SPI FUTURES are pricing in a rise of +49 points when trading kicks off this morning
  • Another major event last night was the rates decision by the European Central Bank (ECB)
  • They kept rates on hold (widely expected) but the commentary around the release was somewhat surprising. 
  • Jean- Claude Trichet was quite positive of Eurozone growth and gave the impression that rates may be on the increase in the next few months. 
  • It’s a fine balance in Europe with the majority of growth coming from Germany however there are signs of inflation that need to be managed. 
  • Whatever the case, it’s a positive as rising inflation shows the economy is expanding rather than contracting.
  • This goes against a lot of bearish commentary out there that has been very downbeat about the European outlook. 
  • We saw a spike in the EURO last night and for mine, the chart of the EUR v USD looks quite bullish. 
  • This supports my view that developed economies and companies with exposure there will be the place to have exposure as the year progresses. 
  • Stocks trading overseas 
    •  
    • In New York, News Corp rose by US$0.35 to US$18.50, equivalent to A$18.23, A$0.30 above its last close on the ASX.
    • ResMed rose by US$0.86 to US$32.52, equivalent to A$3.20, A$0.06 above its last close on the ASX.
    • In London, Rio Tinto rose 104.5 pence to £43.51, A$1.67 higher in Australian currency terms.
    • BHP-Billiton rose 53.0 pence to £24.84, A$0.85 higher in Australian currency terms.
    • Henderson Group Plc rose 3.5 pence to £1.64, A$0.06 higher in Australian currency terms

Disclaimer

James Gerrish is an Authorised Representative (Rep No. 352904) of Shaw Stockbroking Limited ("Shaw Stockbroking"). Shaw Stockbroking is a holder of Australian Financial Services Licence No 236048. Shaw Stockbroking, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
 

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