Global Equities Rally With Commodities, Amazon At New All-Time High, ASX SPI200 Futures Up 30 Points

Global equities rallied on Tuesday following Chinese CPI data that was in line with expectations (2.3% vs 2.3%) and PMI, while still negative, beat expectations of -3.7% with a reading of -3.4%. Major indices were up across the board, the DAX30 +0.65%, FTSE100 +0.68%, S&P500 +1.25% and the Nasdaq100 up 1.4%, as higher commodity prices boosted investor confidence. Commodity sensitive companies led the S&P500 higher with energy & raw-material producers up 1.8% while Amazon, up 3.43% at an all-time high, helped boost the Nasdaq100 as analysts raised price targets for the online retail giant. 

Oil prices climbed higher following concerns supplies from Africa’s largest crude reserves becoming disrupted due to rebels in both Libya and Nigeria. WTI & Brent Crude closed 2.81% and 4.08% higher respectively, elsewhere Natural Gas closed +2.86% higher, Spot Gold +0.03%, Spot Silver +0.50%, Iron Ore +0.49% while Copper fell -0.66%.

In the U.K. the “Brexit” debate continues to heat up as polls by Bloomberg now suggest the leave & remain votes are tied with 41% each while 19% of the vote remains undecided. We’ve seen recent data disappointments out of the U.K. and we can expect this trend to continue until there is an outcome from the referendum. Markets hate uncertainty and there is plenty of it going around, particularly around how a post “Brexit” Europe would look. My best guess is that the biggest impact would be contagion to periphery countries in the Euro, if the U.K. can leave why can’t they? We have U.K. industrial production & manufacturing data (YoY & MoM Mar) at 6:30pm Sydney time which are also forecast to show a continued rebound month to month but drop year on year. Traders are likely to focus on Thursdays Bank of England rate decision & inflation report at 9:00pm Sydney time, it is highly unlikely there will be any change to the current 0.50% benchmark rate. The chart below shows the GBPEUR currency rate which has been under pressure as a result of the uncertainty, should the “remain” camp be victorious a risk on mentality would return and a potential rally back towards 1.35, the same could be said for the FTSE100 which is down approximately 13.5% from all-time highs.

Locally, the ASX200 closed 22.09 points (+0.42%) higher at 5,342.79 and the market looks set for a stronger open this morning with ASX SPI200 futures up 30 points in overnight trading. We have the Westpac Consumer Confidence Index (May) out at 10:30am followed by home loan & investment lending (Mar) at 11:30am Sydney time. 


Source: Rivkin, Bloomberg, Updata

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This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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