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Trade: ASX to rally on strong overseas leads, Saxo Bank

Saxo Capital Markets (Australia)

Trading Desk / Saxo Capital Markets

  • Overseas markets rose following the Fed chair’s comments and news on Greece
  • Copper led the base metals, up 1.8%, while gold and oil fell
  • AUDUSD continues to seek clear direction and is trading within 0.7850 and 0.7730

Overnight

US stocks rose to fresh records on Tuesday after Federal Reserve Chair Janet Yellen signaled that future interest-rate increases will be clearly marked and noted the recent improvement in the US economy.

Investors spent the session poring over Yellen’s speech for clues about when the Fed will begin to raise short-term interest rates, which have been held near zero since December 2008. In prepared remarks to the Senate Banking Committee, Yellen said if the economy kept improving as the Fed anticipates, the central bank “will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”

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The Standard & Poor’s 500 Index rose 0.3% to a record 2115.52; the Dow Jones Industrial Average gained 92.67 points, or 0.5%, to 18,209.51, as Home Depot and JPMorgan Chase rallied. The Nasdaq Composite Index added 0.1%, climbing for a 10th straight day to bring it 1.6% away from its 2000 record.

European stocks also extended their gains on the back of the Fed’s stance and as Greece reached a bailout deal. The Stoxx Europe 600 Index rose 0.6% to 387.25 at the close of trading, pushing its gains this year to 13%. The UK’s benchmark FTSE 100 Index closed at a record high, after a rally in mining stocks helped push the index past its previous record set in 1999 of 6950.

Greece’s ASE Index soared 9.8%, following a market holiday on Monday, as euro-area leaders approved a bailout extension for four more months. Germany’s DAX climbed 0.7% to 11,205.74, its 16th record high of the year. France’s CAC 40 added 0.5% to 4886.44, its highest settlement since June 2008.

Local Markets

  • S&P/ASX 200 Index futures contract rose 0.5% to 5,912; suggesting a gain of 0.2% relative to fair value
  • Bank of New York Australia ADR Index was up +3% with BHP Billiton ADR up a very impressive +5.8% after Monday night’s sell-off prior to its reporting. Rio Tinto ADR also rallied on the back of BHP, up 1.9%
  • Spot gold fell 0.2% to a tidy $1,200 as safe-haven buying eased following positive sentiment of the Greek deal. Gold stocks: NCM, NST, AQG, EVN, KCN, RMS, SLR
  • Brent Oil lost 1% as investors await US Crude inventory data in the US, to see if new record levels will be set again. Oil stocks: WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY
  • Iron ore has climbed 0.9% as April contracts saw a rise in demand. With CNY holiday over tomorrow, an expectation for construction to pick up again following the winter months will see a floor at these levels. Iron ore stocks: AGO, FMG, BHP, GBG, GRR, MGX, RIO, ARI, BCI, SDL
  • Copper led the base metals, having a good night up 1.8% to $5,784 and surging away from January’s five-year lows. Copper stocks: PNA, OZL, SFR
  • Nickel was not far behind, up 1.5% to $14,335. Nickel stocks: WSA, SIR
  • Stocks trading ex-dividend today: Cover-More (CVO), Evolution Mining (EVN), Magellan Financial (MFG), Navitas (NVT), Santos (STO), Telstra (TLS), Transpacific (TPI), Woodside (WPL)