By Greg Peel

The Dow closed up 71 points or 0.6% while the S&P gained 0.7% to 1328 and the Nasdaq added 0.7%.

Last night saw the release of the ADP private sector employment report in the US for March, and at 201,000 jobs added the result largely matched economist expectations. The important point, however, is that for the past four months ADP job additions have averaged 211,000 compared to the previous four months at 74,000. It is estimated 125,000 new jobs must be added each month to reduce the rate of unemployment, so the trend remains positive.

The release was enough to encourage further buying from the bell, but the reality is traders suspect the bulk of the rally of the last couple of days can be put down to end of quarter “window dressing”. The combination of geopolitical risks which coincided in March had many fund managers running for safety, but the perceived dissipation of those risks in the interim has meant many being caught out holding too much cash. They do not want such a cash level to appear on their end of quarter statements and discourage funds flow, so stocks need to be bought back before tomorrow night's bell.

For those happy with their portfolio weightings, a little bit of a nudge in the final sessions also helps to spruce up return results.

There's one more session to go tonight, and then the new quarter kicks off on Friday night with the release of March non-farm payrolls. As to whether there will be a post-window dressing sell-off is still anyone's guess.

More fundamentally, last night FOMC member Richard Fisher from Dallas joined the growing hawkish chorus at the Fed in declaring he would not vote for further monetary stimulus beyond the expiry of QE2 in June. The question remains as to whether an end to the QE program will also mean an end to stock market support.

It is notable last night the Dow was at one stage up 104 points to 12,383 – only eight points short of the February high (equivalent to June 2008). But there it met selling, suggesting traders are happy to take profits ahead of what might be a questionable rally opportunity thereafter.

End of quarter activity also dominated trading on the London Metals Exchange last night, but the twist is commodity funds are more prone to lighten positions ahead of an accounting cut-off rather than embellish them. Traders thus read little into a fall in metal prices across the board, including a 2% drop in copper. It will be interesting to see what impact these movements might have on the Australian market today following yesterday's surge, which itself was no doubt attributable to window dressing as well.

Back in the real world, the euro found support last night following a comment from an ECB committee member which hinted that the now well telegraphed rate rise next week will mark the beginning of a tightening phase rather than just a one-off adjustment. The euro was competing with the US dollar, however, for strength off the back of central bank commentary.

Forex traders are also noting evidence that the “risk trade” is back on now that geopolitical concerns have subsided, and that means selling low-yield yen and buying high-yield currencies such as the Aussie. The Bank of Japan will be happy that the yen is falling again, but the Aussie is now pushing further past its 29-year high at US$1.0329.

Oil was little changed last night with Brent at US$115.13/bbl, while gold was up US$4.80 to US$1422.50/oz.

The big move, however, was in US natural gas futures. They jumped 2% following a speech from President Obama in which he proposed a one third reduction in reliance on foreign oil imports by 2025 offset by a greater exploitation of US natural gas and biofuels.

The response to end of quarter in the US bond market was light volume, with fund managers looking to closely match quarterly indices. The Treasury auction of seven-year notes met with subdued demand but yields later fell as funds squared up. The ten-year yield dropped five basis points to 3.44%.

The SPI Overnight rose 23 points or 0.5%.

Today is the last day of the March quarter in Australia, so basically anything could happen.

Rudi will be appearing on the Lunch Money program on Sky Business at noon today. Prior to that he will also appear at around 9.45am to comment on FNArena's newest initiative: the Australian Investor Sentiment Survey, in cooperation with the Australian Investors' Association (AIA). A Big Thank You to all of you who participated in March.

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