By Greg Peel

The Dow closed up 65 points or 0.5% while the S&P gained 0.6% to 1405 and the Nasdaq added 0.1%

Yesterday in Australia brought the news no self-funded retiree wanted to hear ? a shock and awe rate cut from the RBA. With Australia's government borrowing rate hitting lows not seen since the fifties, and government (on both sides) hellbent on returning the budget to surplus for political gain, once again the only cohort in Australia with a voice ? the mortgage belt swinging seats ? have won the day.

Between a slowing China and a still volatile Europe, a two-speed domestic economy, a government fighting against any concept of fiscal support, and a banking system transitioning to funding cost-based lending rates, the RBA saw room to drop by 50. Australia is now waiting to see how much of the cut the banks will pass on to lending rates. Depositors can nevertheless rest assured their next rollovers will be 50bps lower, or near enough.

It would not have been lost on the RBA that yesterday morning Australia's April manufacturing PMI came in at 43.9 ? a rapid acceleration in contraction from March's 49.5. Not the country's biggest GDP contributor but certainly one of its largest employers, the manufacturing sector clearly needs the RBA's help. It won't be getting any fiscal support from a government making spending cuts despite a low level of debt, an AAA rating, and a painfully strong currency.

Australia prides itself as being one of the strongest economies in the world but in China ? an economy being deliberately contained ? Beijing's April manufacturing PMI rose to 53.3 from 53.1 in March to mark increasing expansion. The UK, which is suffering from debt-related austerity measures requiring central bank quantitative easing, the PMI fell to 50.5 from 51.9 but remains in expansion.

The eurozone is clearly a candidate for a weak PMI result, but the May Day holiday means that number is not out until tonight. Meanwhile Wall Street was pleasantly shocked by a PMI increase to 54.8 from 53.4 when all peripheral data seemed to be pointing the other way.

It was that result which had Wall Street jumping out of the blocks last night, with the Dow surging to be up 125 points at midday. Sell in May? It's not always a given. Assuming Europe can stay afloat and China is not crashing, Wall Street can look to strong corporate earnings and, in this case, improving economic data in determining where it wants to go next. At midday the Dow had returned to levels last seen in December 2007.

It was not to last, however, as the sellers moved in later in the session. For every yin there is a yang, and the yang in this case is that of solid US data meaning less chance of QE3. One wonders what America's obsession is with QE3 ? neither QE1 nor QE2 really achieved much. The result, stock market-wise, is net positive but the trade off is an enormous Fed balance sheet in the face of a massive fiscal budget deficit ? a deficit that will soon return glaringly to the spotlight as the election approaches.

Australia certainly does not want to see QE3, neither for the macro reasons which might force its implementation nor for the impact it will have on the Australian dollar. Last night the US dollar index (of which the Aussie is not a constituent) was steady at 78.82, but the Aussie is almost a cent lower in 24 hours at US$1.0336. Counter easing moves from other world central banks will only undermine the RBA's cut.

The US manufacturing PMI result was enough to push the US ten-year bond yield up 4bps to 1.96%, but global commodity markets did not see any reason to rouse from their current slumber. Gold remains stuck around 1660, base metal moves were small and mixed last night and Brent crude is stuck at 119. West Texas crude was nevertheless patriotic, rising US$1.08 to US$105.95/bbl to bring that spread in just a little further.

The SPI Overnight was up 20 points or 0.5%.

While Wall Street might enjoy basking in the glow of its manufacturing PMI, that sector represents only around 25% of the US economy. The services sector represents the majority, and global service sector PMIs are out tomorrow, other than the eurozone's which again be a day behind.

Brambles ((BXB)) will provide a trading update today but the highlight on the corporate calendar today, for more reasons than one, will be the release of ANZ Bank's ((ANZ)) interim result. As the leader in the transition away from cash-rate based lending, ANZ could well be in for a torrid time in the press if it posts a solid number in absolute terms (not factoring a comparison to expectations) and then disappoints on its RBA pass-on amount.

For Australia's self-funded retirees and anyone hoping to grow superannuation value without too much risk, the time has come to make the big decision. Deposit rates will no longer be attractive after yesterday and have indeed been losing their attraction now for some months.