By Greg Peel

The Dow closed up 125 points, or 0.9%, while the S&P gained 1.0% to 1539 and the Nasdaq added 1.3%.

On October 9, 2007, the Dow Jones Industrial Average closed at 14,164. On October 11 it peaked at an intraday high of 14,198. On March 6, 2009, the Dow troughed at an intraday day low of 6,469, and on March 9 posted a closing low of 6,547. Last night the Dow closed at 14,253.

Close to close, the GFC bear market represented a fall of 54% and the rally back has now exceeded 116%. The Dow Jones Transport Average hit a new all-time high in February. If you're a Dow theorist, last night triggered a major bull signal, with both Transports and Industrials posting new highs.

If you're more grounded, you might note the broad market, and more representative, S&P 500 is still 26 points or 1.7% shy of its own all-time high, and the Nasdaq is miles shy of its dotcom peak. It's interesting to note that when Wall Street peaked in 2007, no one had heard of Facebook. Rupert Murdoch had thought he was on a real winner with MySpace.

It's taken four years, but as far as newspaper headlines are concerned, the GFC is now history. It's not of course ? private sector debt has just been shifted to the public sector, with new money printed to cover it. But Dow-wise, it's still a significant event. The question is: Will the newspaper headlines bring in the herd? All that timid "cash on the sidelines"?

It was service sector PMI day across the globe yesterday, and there were some surprising results.

Least surprising was the US result of 56.0 last month, up from 55.2 in January. The US manufacturing PMI also rose in February and with Ben stoking the furnace, the US economy is apparently steaming forward. Most surprising was the UK result of 51.8, which is up from 51.5 and in the opposite direction to both UK manufacturing and expectation. Maybe the BoE won't pump up QE on Thursday?

Also a little surprising was the eurozone result, which at 47.9 represented a fall from 48.6 into deeper contraction, but a lower number was anticipated. It was thus considered a "good" result.

Most worrisome were China's numbers, with HSBC's result yesterday showing 52.1, down from 54.0, and the weekend's official number showing 54.5, down from 56.2. The manufacturing numbers also showed an easing in the pace of expansion, but again we must take the New Year holiday into consideration. Furthermore, the new Chinese government yesterday announced it would increase its budget deficit in 2013 by 1.2trn renminbi to support economic growth and social welfare. That's a 50% increase on 2012.

Most encouraging was Australia's result, which at 48.5, up from 45.4, suggests a decent slowing in the pace of contraction. The manufacturing number showed a similar slowing. Could Australia's non-mining economy actually have bottomed out? Yesterday's January retail sales number showed a 0.9% gain when only 0.4% was expected. And that doesn't include on-line. "There are signs that the easier conditions are having some of the expected effects," said the RBA yesterday.

While it shocked no one that the RBA left its cash rate unchanged at 3.00% yesterday, the Aussie still rallied as a result. It's up 0.6% to US$1.0248 over 24 hours. The RBA is keeping a close eye, but believes the significant easing to date is having an effect and has not yet reached full impact. The debate as to whether the central bank will cut or won't cut soon will continue to rage if we consider this crucial paragraph from yesterday's statement:

"During 2012, there was a significant easing in monetary policy. Though the full impact of this will still take more time to become apparent, there are signs that the easier conditions are having some of the expected effects. On the other hand, the exchange rate remains higher than might have been expected, given the observed decline in export prices, and the demand for credit is low, as some households and firms continue to seek lower debt levels."

Got a coin?

The US dollar index dipped 0.2% to 82.09 last night as a general "risk on" mood permeated. Not only was blue sky in New York the centre of attention, the Chinese deficit announcement was driver behind that blue sky. Base metals were all stronger in London, albeit only slightly, while after a longish slide the oils rebounded. Brent jumped US$1.52 to US$111.61/bbl and West Texas gained US77c to US$90.89/bbl. For WTI, the 90 level offers strong support.

Gold nevertheless rose US$6.60 to US$1576.30/oz, while spot iron ore, which pays scant attention to Wall Street, plunged US$3.60 to US$145.20/t yesterday.

After a rally-back yesterday, aided by China's news, that almost matched the sudden plunge on Monday, the local market is set to kick on again today on the basis of a 20 point or 0.4% rise in the SPI Overnight.

There are a few more ex-divs today locally, including Rio Tinto ((RIO)), and we await the December quarter GDP release. We're looking for 0.8% growth quarterly for 3.2% annually.

A final word: While the Dow did hit a new all-time high last night the closing price was actually 33 points below the intraday high, and volume was average rather than strong. I watched with interest live vision of the close at the NYSE and noticed a funny thing.

The traders on the floor of the NYSE are typically a vocal bunch, ready to burst into applause and cheering at the drop of a hat. Yet while press photographers crammed in below the famous balcony as the bell was rung, there was no more noise than that of the usual hubbub of activity. There was no cheering for the highest Dow Jones close in the average's history.