By Greg Peel

The Dow rose 53 points or 0.4% while the S&P lost 0.1% to 1337 as the Nasdaq fell 0.4%.

Why the disparity between indices last night? The answer is Apple. America's biggest company represents a big chunk of the Nasdaq and an influential slice of the S&P, but is not yet in the Dow with the other big market cap, or "blue chip", stocks. After posting a disappointing result late on Tuesday night, Apple shares fell 4% last night. By contrast, Dow components Caterpillar and Boeing both surprised to the upside, helping to drive the average higher in what was otherwise a stumble-along session.

By rights it should have been a more positive session for Wall Street, given the euro bounced a full cent and the US dollar index dropped 0.5% to 83.59. Europe is the world's major risk concern at present so where goeth the euro, goeth US stocks. The Dow was indeed up over 100 points at one stage, but could not hang on.

The bounce in the euro will have been more representative of short covering than keen buying, given it was a bit knee-jerk. A member of the ECB's policy committee, who happens to be the head of Austria's central bank, told Bloomberg he saw some upside in allowing the European Stability Mechanism ? the longer term rescue fund into which the European Financial Stability Facility (EFSF) will eventually be folded ? to apply for a banking licence.

The implication here is that the ESM would no longer be simply an E500bn face value slush fund, but would be able to leverage up via loans through the ECB. This would provide the fund with more fire power, which is a good thing, but would imply saving a Europe destroyed by leverage with leverage. Still, it also implies more money printing one way or another and that's what the world wants to see, be it from the ECB, the Fed, or, preferably, both.

So the euro shot up on the comments, Wall Street attempted a recovery rally, and, most notably, gold jumped US$22.30 to US$1603.60/oz. The recent trend in gold has been weak, but with heightened expectation of QE3 (maybe as soon as next week) gold has been standing firm even as the US dollar has pushed considerably higher. Last night added a European printing option which sent the dollar down for once. There was nothing to hold gold back.

Except that when assessing official commentary, as reported on the news wires, it's always best to read to the end of the article before trading in response. The ECB official in question went on to suggest there are also arguments against the ESM getting a banking licence, and confirmed that there were currently no discussions going on at the ECB on the subject. Basically the guy was just thinking aloud.

There was, however, news last night that may by itself drive expectations of further global stimulus. With the countdown to ignition into hours now rather than days, London was shocked last night when the first estimate of UK June quarter GDP came in as a 0.7% contraction ? well below expectation. If you think we're doing it a bit tough in Australia at the moment, spare a thought for the Poms (before they become the bitter enemy as of next week) who have now endured nine straight quarters of economic contraction. That's not a recession, that's a Great Recession.

The June quarter result (which will be revised a couple of times yet) is the worst for the UK since the March quarter of 2009 ? that which proved to be the GFC nadir. It brings into question the government's ongoing strict austerity policy. There will be many a Pom looking across the Channel and conceding, begrudgingly, that maybe the Frogs have the right idea under their new president. If the Tories do decide to change tack, then any pro-growth shift will require further stimulus, albeit the Bank of England has been in near constant QE mode since the GFC and at 0.5%, the cash rate is lower than that of the ECB.

Meanwhile across the pond, expectation is building that the Fed will do something as early as next week's FOMC meeting, rather than waiting until Jackson Hole or the September meeting. Tuesday night's WSJ article has heightened anticipation, even though it really didn't tell us anything new. But last night more US housing data were released, and it was not good.

US new home sales fell 8.4% in June when economists had expected a gain. Sales reached a two-year peak the month before, but with all this talk of possible double-dip and fiscal cliffs it seems the buyers have once again backed off. Therein lies fodder for the Fed.

Commodities were a little stronger last night on the US dollar's fall, with base metals up marginally and the oils again up by cents, with Brent rising US69c to US$104.33/bbl and West Texas US47c to US$88.97/bbl. The big mover was nevertheless our old mate the Aussie. You can't keep a good man down. It jumped back almost a cent to US$1.0313 to once again suggest it has no intention of breaking down with any meaning under parity.

The SPI Overnight rose 7 points.

The US will have more economic grist for the mill, with pending home sales and durable goods data tonight, as well as more earnings reports. The scorecard to date has earnings growth running at minus 0.6% for the quarter.

In Australia we'll see production reports from Newcrest ((NCM)), Bathurst Resources ((BTU)) and Whitehaven Coal ((WHC)) as well as quarterly sales numbers from the Wesfarmers' ((WES)) retail businesses. And you'd better strap yourself in, because here comes the local earnings season. Today sees result from Australand ((ALZ)), ERA ((ERA)), GUD Holdings ((GUD)) and OceanaGold ((OGC)).

Those of you preparing to sit down with a cup of tea and your stock portfolios to watch Rudi on Sky Business today will be disappointed, we're sorry, because he is in Melbourne. He'll be back on next week.

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