Futures up 0.5% on back of strong overseas leads

Yesterday’s surge of 222 points or 3.9% by the S&P/ASX 200 effectively erased approximately half of the losses incurred during the preceding three day rout.

The index finished at 5942 points, and after strong performances in overseas markets last night this positive momentum could be sustained.

The ASXSPI 200 futures index is up 29 points to 5974 points, implying upside of 0.5%.

The main impetus behind the shift towards global equities was an announcement by the Fed that it would begin buying corporate bonds, in effect bypassing banks and lending directly to the private sector.

There was also good news on the commodities front, suggesting our miners and energy companies should have a good day.

24 hours

In Japan, the Nikkei 225 responded even more strongly than the ASX 200, gaining 1050 points or 4.9% to close at 22,582 points.

The Hang Seng surged 567 points or 2.4%, closing at 24,344 points, while the Shanghai Composite increased 42 points to 2931 points.

UK and European markets benefited from the strong momentum with the FTSE 100 gaining 158 points or 3% to close at 6242 points.

The DAX had a particularly strong session, gaining 3.4% as it put on more than 400 points to close at 12,315 points.

The CAC 40 gained 2.8%, closing at 4952 points.

While US markets didn’t benefit to the same extent, the main indices still made good gains.

The Dow finished up 2% or 526 points, closing at 26,289 points.

There were similar gains in the S&P 500 as it increased 1.9% to 3124 points.

In contrast to recent activity, the NASDAQ played second fiddle to the Dow, increasing by 1.7% to close at 9895 points.

However, the NASDAQ did trade as high as 9963 points, placing it within striking distance of the psychological 10,000 point mark that it broke through last week.

The CBOE Volatility Index contracted 2% to close at 33.6 points.

The shift to equities didn’t bother the gold price as it continued to trade in the vicinity of US$1730 per ounce.

The Brent Crude Oil Continuous Contract increased from less than US$40 per barrel to hit a high of US$41.65 per barrel, before settling at US$40.60 per barrel.

Iron ore was also back in favour, increasing 1.4% to nearly US$105 per tonne.

While copper’s strong surge now looks like transitioning into a consolidation stage, other base metals performed well.

Lead was the standout as it increased nearly 2% to hit a three month high of nearly US$0.80 per pound, up more than 10% in the last month.

Nickel made good ground to push up towards the US$5.86 per pound mark, a level it made last week before retracing. A move beyond US$6.00 per pound would represent a five month high.

The Australian dollar has been going through a fairly volatile period having fluctuated between about US$0.65 and US$0.70 during the last month, and it is now just shy of the US$0.69 mark.