More gains overnight in the US and Europe, oil markets jump, miners higher in London, ASX futures up 66 points

ASX SPI 200 futures have made a 200+ point advance from last week's lows, allowing the critical buffer that sits between the current price and the 4,600-4,700 danger zone to expand. Today's first chart illustrates this short-term advance, while today's second chart illustrates the broader downtrend that the ASX 200 index is sitting right in the middle of. The red line in the second chart is showing the 200-day moving average and as this hugs the top of that downward trend channel, it may provide strong resistance to buying when the market gets to that point of trying to break higher out of the channel. There will be traders content to sell the market in the upper boundary of that range and only when that region is broken, and we see a breakout above the channel (currently 5,200-5,250), will the downtrend be behind us. The moves in global markets have been strong without looking too impulsive at this stage, so we're definitely building the foundation for some healthier levels.

Some good news overnight in London after some very ordinary performances in BHP and RIO's ASX listings yesterday, with both their London listings higher. This was no doubt helped by a 6.79% rally in Glencore PLC (GLEN). GLEN's US$8.45 billion revolving credit facility has been renewed. It looks as though there will be an increased interest charge of about 50 basis points; however, traders should now be less spooked about the prospect of big miners not being able to keep control of favourable financing terms from banks. It looks as though the low interest rate environment globally is keeping bank appetite for corporate lending issuance high and it is a great signal that a depressed commodity producer like GLEN, which has lost two-thirds of its share price over the last 12 months, is able to get such a big deal done on reasonable terms. Anglo American (AAL) jumped 11.26% in a response to its preliminary results and additional asset sales, and the stock has doubled since copping a hammering in January. It's recovery over the last month to 442 pence sounds good, but probably comes as little consolation to those who bought it a year ago at 1259 pence. Nonetheless, the changes in trend dynamics within these big miners are important for BHP and RIO, and thus important for our market sentiment. None of these stocks deserve to be treated like it's 2011, and, even after all of the selling, none of them are outright 'cheap', but the selling has been vicious and some of these names could be in for a short-term bounce.

Index and Aussie dollar traders please keep an eye on your positions at 11:30 today (Sydney time), when the Australian unemployment rate will be released. Expectations are for a 5.8% read, unchanged from last month. Chinese CPI and PPI will be released at 12:30pm, which also has the potential to move markets. Iron ore backed off one percent last night, copper advanced, and WTI/Brent crude were up 7.27%/8.27%.


Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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