It was a big night for risk assets as stocks surged after the Republicans offered and Olive branch with a 6 week extension to the debt ceiling and the Whitehouse called this encouraging. The result was that the Dow has recovered most of its losses this month with a rise of 323 points or 2.18%. The Nasdaq was similarly ebullient and is up 2.26% while the S&P has broken back above the trend line it broke through earlier in the week with a rise of 37 points (not a typo) or 2.21%.
The S&P needs to close the week above 1700 to get me excited that this rally is sustainable. That’s not to say that I am a bear per se but that would prove a key reversal and a very bullish candle and set up for the weeks ahead.
Likewise the Australian market had a great night overnight and has regained all of its losses for the week and while its price action over the past 24 hours looks great this 5200 level on the SPI 200 seems a key pivot point so a close on the week above here would be a very positive step.
But given it was a “risk on” night markets all over the globe took their lead from the US news. European stocks rallied hard with the FTSE up FTSE 1.45%, the DAX rose 1.99%, the CAC was 2.2% higher while stocks in Milan and Madrid rose 1.54% and 2.35% respectively.
Besides gaining 0.9% against the Yen the USD didn’t really gain from the stock rally but the Aussie Dollar gained from the risk on move rallying from a low of 0.9387 after the employment data yesterday and is now sitting at 0.9453 just back from a high of 0.9471. The Euro sits at 1.3530 and GBP is at 1.5977
On commodity markets there was a bit of excitement as the Israeli Defence Force sent a Tweet about 1973’s Yom Kippur war mentioning Syria which was misread by traders as relating to current events. At the close Nymex crude was 1.27% higher at $102.90. Gold fell $10 or 0.79% to $1297 while copper rose 2 cents to $3.24 lb.
ON the data front the is nothing of note in Asia and then a raft of CPI data in Europe tonight.
Watch out for any comments relating to the deal, or at least the proposed deal, in the US
The Aussie Dollar found support at my fast moving average as you can see in the chart below but the reality is that it remains within a box or range at the moment and only a break of either side will kick it on.
HAve a great day and good hunting