Asia-Pacific Markets Overview - 09/28/2011

On Wall Street overnight, stocks posted their third straight session of gains on improving global sentiment, although they did manage to finish off their highs amid reports of division in the Eurozone over the terms for the second Greek bailout. In Greece, the government approved an unpopular property tax which is crucial to its austerity plans.

The Dow Jones Industrial Average was the top performer, rising 1.3% while the broad-based S&P 500 and NASDAQ rose 1.2% and 1.1% respectively.

Locally, the ASX 200 looks set to continue its recent rebound with futures pointing towards a gain of 1.1% to 4049 on the open. We are expecting broad-based gains as all sectors in the US finished firmly in the black as cyclical, risk based sectors continued to benefit from the end of month and quarter reallocation trade.

Materials are likely to be among the best performers today after the US sector added 2.1%. Base metals on the LME were all up between 1.9% and 5.3% while Rio Tinto and BHP rose 7.8% and 7.3% respectively. Locally, BHP's ADR is calling the Australian listed stock to open 1.4% firmer at $35.84.

Gold stocks could see some consolidation today after the precious metal futures largely treaded water overnight, finishing the session pretty much unchanged at US$1652/oz.

Crude oil futures continued their recovery higher, rising 1.5% to US$83.65/bbl, which could underpin further gains for Australia's energy names. The likes of ExxonMobil, Chevron and ConocoPhillips were all up between 0.2% and 2.2%.

Elsewhere, we're likely to see reasonable gains among industrial and financial names following further gains among the US listed names.

In summary, we're expecting to see further gains at the open of trade as stocks continue their relief rally. Once again, there is very little in the way of local economic news so sentiment is going to continue to be dominated by the big macro forces in play.

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(From IG Markets Strategist Ben Potter)