Financial markets have breathed a sigh of relief and continued to accelerate in the first trading sessions 2012, with bullishness returning aplenty. The US dataflow has been good and reinforces the consensus that the US will have a good, if slightly stagnant (ca. 2% GDP growth) 2012, whilst those silly Europeans do whatever they have to do to get over some small crisis of sorts, and the Asian and emerging economies keep bursting at the seams. Everything is fine.
Markets run on these bullish sentiments, even if they are not founded in reality, to the frustration of macro analysts everywhere (especially those on holidays..)
After a solid day in Asia, European markets opened with a flurry, with both major bourses cracking their resistance levels and heading back to the late October levels of exuberance, but not exceeding them. The UK FTSE put on more than 2% to finish just below 5700 points, whilst the German DAX was up 1.5% to finish at 6166 points, breaking out above its bearish-biased symmetrical triangle pattern, with the next target resistance at 7000 points:
The Euro (EUR/USD) has climbed above the “critical” 1.30 level against the USD, rising almost 1% overnight, currently trading at 1.3051, as the USD Index slipped below the 80 points level, falling against all other undollar currencies (Swissy, Sterling, Yen etc) currently down 0.7% at 79.89 points:
US equity markets responded in kind, as risk was on like Donkey Kong. The S&P500 finished up nearly 20 points or 1.5% higher to 1277 points, the tech heavy NASDAQ even higher, up 1.8% to 2648 and the Dow Jones up nearly 200 points or 1.5% to 12397. The S&P500 has formed a bullish ascending triangle, with resistance around 1290 points, which if breached, constitues a target for this rally up to 1360-1370 points (approx. 7% away):
The AUD continues its resiliency and proxy for commodities into the new year, and saw a big boost overnight to almost 1.035 against the USD and just under 79.50 cents against the Euro.
The big rises were in commodities – with tensions continuing in the Straits of Hormuz as Iran “calls the shots”, WTI crude jumped over 4% and above $103USD a barrel, with Brent crude also up strongly to be over $112 USD per barrel, with the former looking like forming a bullish inverse head and shoulders pattern on the daily chart, with a break above $104USD a barrel a trigger:
The rally extended to gold, which jumped nearly $40USD an ounce to be over $1600USD but not its 200 day moving average (a closely watched long term average for traders) with resistance at $1620 to be cleared before a bullish signal eventuates:
The Aussie SPI Futures point to a higher open for the S&P/ASX200 index , currently up approx. 20 points or 0.5%, probably opening around the 4120 points level.
Trading Day will cover the Asian market session and the “ASX8” stocks after the close in the afternoon.