Global Markets Overview –3/6/2013

Europe and the US trotted out more strong data overnight, this time in the non-manufacturing sectors.

European services PMI moved closers to expansion at 47.9 (ahead of forecasts of 47.3), and Britain's key services sector produced a stellar figure of 51.8, showing it is still expanding. However, US non-manufacturing was the one everyone was waiting for; a good result here could be the push the Dow and the S&P to all-time highs.

It didn't disappoint, jumping to 56 versus a forecasted 55 and the previous month's figure of 55.2. It really does show that the US is well and truly on the path to recovery. Coupled with Vice Chairperson Janet Yellen's comments on Monday and Chairman Ben Bernanke's statement on Saturday that stimulus is here to stay (for now away), the market has only one option overnight and that was to go north.

Heading into the close, the S&P was up 14 (0.90%) points to 1539 (a 52-week high) and is now only 37 points off its all-time high. The Dow was up 128 points to 14,256 (+0.91) after reaching its all-time high of 14,286 earlier in the day.

Here are a few stats about the US recovery: about $10 Trillion dollars has now being restored to the US equity markets since the low in 2008. Sectors that have benefited the most from this meteoric rise have been banks (same as Australia), manufacturing and retailers, (where Australia is still lagging behind). The last four and half years was the worst bear market in the US since the Great Depression of the 1930s, however it has taken 1357 days to recover all losses (DJIA), which is more than a year faster than the dot com bubble recovery. Think about that last statement - biggest single loss since the Great Depression; recovery was a more than a year faster than the internet bubble; what else but a tear away bull market can this be?

China also helped the US move higher last night as the People's National Conference moved into its second and most important day. The most influential piece of data was the fact China has reaffirmed its growth guidance at 7.5%; inflation is to be lowered slightly from last year to 3.5%. It has also confirmed it will increase fiscal spending by 10%. There are all very steady numbers, and the leadership group looks set to manage China's economy very closely, and a hard landing looks less and less likely. This should benefit our market over coming months as we look to leg higher.

Moving to the open, we are calling the ASX 200 up 19 points to 5094 (+0.37%) as investors continue to fear 'missing out'. WBC should hit its all-time high today, ANZ and NAB look like they are finally going to play catch up having been left behind by CBA and WBC. Risk should also move higher today as commodities also moved north overnight on the China news, with BHP's ADR suggesting the stock will add 80 cents to $36.20 (2.25%) today. It will be interesting to see if the market can punch through the 5100 mark and hold above this level, with the ASX still 34% down on its all-time high, it needs to be able to hold this level if it is going to find itself legging up to 6853 points.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

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