Global Markets Overview – July 2, 2014

A worker lines up the motherboard as he assembles a 32-inch TV at Element Electronics in Winnsboro, South Carolina May 29, 2014. When Walmart pledged last year to buy an extra $250 billion in U.S.-made goods over the next decade, it appeared to be just what was needed to help move America's putative manufacturing renaissance from rhetoric to reality. The company says consumers can now buy everything from U.S.-made flat-screen TVs, light bulbs and towels and curtains in its stores and on its website. The flat-screen TVs, made in Winnsboro, South Carolina by Element Electronics, may be the campaign�s biggest surprise to date. Today, Element�s 315,000-square-foot plant in South Carolina has six assembly lines making 32- and 40-inch TVs that are now available in all of Walmart's more than 4,000 U.S. Stores. The switch has led to significant savings in ocean freight charges and customs duties on finished goods - though like so many companies involved in the initiative Element has had difficulty finding domestic suppliers. To match Feature WALMART-RESHORING/ Picture taken May 29, 2014. REUTERS/Chris Keane (UNITED STATES - Tags: BUSINESS EMPLOYMENT)

Global markets focused on a broad recovery in manufacturing in some key economies. China's numbers in Asian tradeyesterday set the tone and this carried through to European and US trade where we also received some encouraging manufacturing numbers. After an ordinary Q1, it certainly looks like the US is on track for a Q2 rebound, and this encouraged some positive price action across the equities space.

The risk currencies managed to extend their gains against the greenback with the AUD being one of the notable movers. AUD/USD finally nudged through April highs in the 0.946 region and extended its gains to a touch above 0.950. This saw the pair trade at its highest since November last year. After a period of consolidation around 0.940 heading into the RBA decision, it seems the pair had set enough of a base to extend its gains from.

The reaction to the RBA suggests the market was positioned for a dovish RBA, but with the 'period of stability in interest rates' line being maintained then this saw the market's position shift. The market was not phased by the line 'offering less assistance than it might in achieving balanced growth in the economy' when referring to the exchange rate. In terms of where the pair might go in the near term, the previous uptrend line running from February is likely to offer some resistance, but this only kicks in closer to 0.955. Any dips into the uptrend support are likely to be used as an opportunity to buy. On the calendar today we have trade balance data due out at 11.30 AEST while RBA Assistant Gov Debelle speaks later tonight.

Resources could lead the region

Ahead of the local market open we are calling the ASX 200 up 0.5% to 5402. After a couple of disappointing sessions, this could finally be the trigger for the Australian market to start edging higher. As I said yesterday, the local market only put on 0.9% for the first half of the calendar year and if we are to perform as widely expected by most analysts, we'll need to have a big run in the second half.

The fact that China concerns are fading should encourage some buying in the cyclical plays, particularly the resources. Japan's recovery and a strong indication of spending from yesterday's Tankan report is also likely to play a big part as Japan has been tipped to start ramping up trading with Australia again. The Nikkei is looking to extend its gains at the open today and could lead the region again.

Iron ore managed to recover after a dismal few days and this could play in the hands of the pure plays today. Atlas Iron announced some job cuts and plans to ramp up production after market yesterday. This could help the miner out today after having struggled significantly in recent times. Independence Group will also be in focus after a fairly encouraging trading update. REA Group, which was one of the best performers of FY14, has an investor briefing this morning which might deserve some attention. The banks will remain a near term concern after having struggled all week.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,401.60	26	0.48%
Japan 225 (Nikkei)	15,422.50	97	0.63%
Hong Kong HS 50 cash (Hang Seng)	23,255.50	65	0.28%
China H-shares cash	10,325.20	5	0.05%
Singapore Blue Chip cash (MSCI Singapore)	368.80	-0	-0.05%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,964.10	121	0.72%
US 500 (cash) (S&P)	1,974.41	12	0.62%
UK FTSE (cash)	6,798.10	42	0.61%
German DAX (cash)	9,911.80	74	0.75%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (June)	16,937.00	38.00	0.23%
S&P Futures (June)	1,966.00	6.00	0.31%
ASX SPI Futures (June)	5,364.00	16.00	0.30%
NKY 225 Futures (June)	15,448.00	40.00	0.26%
Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT)	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
AUD/USD	$0.9494	0.0040	0.44%
USD/JPY	¥101.540	0.110	0.11%
Rio Tinto Plc (London)	£32.05	0.96	3.09%
BHP Billiton Plc (London)	£19.25	0.36	1.88%
BHP Billiton Ltd. ADR (US) (AUD)	$36.45	0.46	1.27%
Gold (spot)	$1,326.95	-1.06	-0.08%
Aluminium (London)	1882	-5.00	-0.26%
Copper (London)	7007.25	-6.75	-0.10%
Nickel (London)	19136	66.00	0.35%
Zinc (London)	2184.25	-32.50	-1.47%
Iron Ore (62%Fe)	94.2	0.40	0.43%