Last-minute rally caps off a volatile session for US stocks, ASX futures up 90 points

Closing levels across major European & US indices look great this morning: Italy, France & German all up over 3%, in the US the S&P 500, Dow and NASDAQ averaged close to +2.5%. Less than one hour before the close, however, US markets were close to being flat until investors got excited again and bought just about everything. US equities followed WTI & Brent crude higher (as illustrated in today's first chart), with crude oil rising 10% for the session. Copper (see second chart) rose 4.47%, which is significant, given it's such a popular leading indicator for global growth prospects. Copper is still down over 3% on a rolling monthly basis; however, it was recent equity weakness that pushed it lower out of its consolidation pattern that was forming throughout early August and if traders believe that it will break higher and re-form a base of buying support above current levels, then short-term buying could easily continue. Today's second chart illustrates the recent (down)trend channel and the early signs of copper testing that upper range. The trend from here will likely be dictated by whether the world gets behind China's attempt to stimulate its economy and demonstrate significant evidence of infrastructure construction tied to its 'One Belt, One Road' initiative.

With regard to growth, investors would have drawn confidence from second-quarter US GDP growth figures, which came in at an annualised rate of 3.7%, outstripping expectations of 3.2%. This builds upon Wednesday's 101.5 (expanding) consumer confidence score and better-than-expected durable goods orders. So while equity markets have been volatile, it seems that the underlying (backward-looking) US economy is continuing to emit satisfactory economic data and this is no doubt helping fuel the recovery in US stocks. The trick will be to ensure that this market volatility doesn't dent confidence too much and keep the data momentum going.

The broad rally in commodities last night, which pushed the Thomson Reuters CRB Index 3.97% higher, will assist Australia's resources stocks today while financial names will likely broadly benefit from general strength, but the big test will be whether investors have the nerve in Australia to remain bullish into a Friday night close. Just recently you'll remember the Friday sell-offs associated with the Greek crisis (admittedly a lot more political activity can take place on a weekend than equity market activity), and last Friday night's US equity sell-off will be fresh in the minds of traders today.

Source: Rivkin, Saxo Bank

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

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

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.