By Greg Peel

The Dow rose 66 points or 0.4% while the S&P gained 0.9% to 1656 and the Nasdaq added 1.0%.

It was not surprising to see the ASX 200 plunge from the open yesterday. Bridge Street had been to a great extent defying weakness on Wall Street all week, taking heart from corporate profit results that were more net positive than negative, and also from a weaker currency. But something had to give on another Wall Street down-day, and give it did, to the tune of 1.4%.

It was thus encouraging to see the index rebound very swiftly. Importantly, the bulk of that drop had been recovered by late morning, ahead of the release of HSBC's flash estimate of China's August manufacturing PMI. It came in at 50.1, up from 47.7 in July, and Bridge Street had another kick. We didn't close up, but it could have been a lot worse.

As at Wednesday, 125 stocks covered by FNArena database brokers had reported profits. The beat/miss ratio (based on the estimates of database brokers and some applied subjectivity towards headline results versus underlying results ex of lumpy one-offs) stands at 31/24 or 1.3 to one. Bear in mind, earnings forecasts had been considerably reduced in the lead-up to the result season, but it has been a long time since net forecast earnings have been revised up for the next period, rather than down. See the FNArena Reporting Season Monitor.

The Chinese manufacturing result is a relief for global markets, and Australia's in particular. The figure just above 50 brings HSBC in line with Beijing's official July number, and suggests the Chinese economy has stopped slowing. It's not off to the races, but after months of government reforms aimed at curtailing corruption, dodgy dealing and shadow banking, perhaps now we are be back to business.

The news from Europe last night was also encouraging, with the eurozone flash manufacturing PMI rising to 51.3 from 50.3 to underscore the region's apparent slow recovery. The flash composite PMI (manufacturing plus services) rose to 51.7 from 50.5.

The US chimed in with a slight gain to 53.9 from 53.7 for its manufacturing PMI. All good.

In other US economic releases, the FHFA house price index (houses with Fannie/Freddie mortgages) rose 0.7% in May for a 7.7% year on year gain. The Conference Board index of leading economic indicators rose 0.6% for July.

The only downer was the weekly new jobless claims figure, which saw a rise of 13,000 to 336,000. But if we ignore volatile weekly movements, the more indicative monthly running average fell 2,250 to 330,500, its lowest level since November 2007.

So here we have an interesting situation. All week US stock indices have been falling on taper-talk, with Wall Street deciding September it must be. Yet nothing, nothing, from the Fed suggests it must be September specifically, and the Fed has said time and time again it will depend on the data. Good data would speed things up and bad data will slow things down. Well last night saw good data, and by rights Wall Street should have plummeted. It did the opposite. So where is the real strength on Wall Street? Not with the sellers, it would seem.

For the Dow it was the first up-day after six consecutive down-days. The more important S&P has had one up-day this week already, and last night well outstripped the Dow. The positive session belied the fact a technical glitch crashed the Nasdaq for three hours, with trade resuming only on the death.

Not only did Wall Street defy the assumed "bad news is good news" theme last night, but stocks rose despite another rise in bond yields. The ten-year gained another 4bps to 2.90%. A lot of this past week's weakness in stocks has been attributed to weakness in bonds (higher yields), which is a reflection of QE. In a non-stimulated economy, the equation works the other way around.

In forex land it was a matter of the euro and the US dollar fighting for PMI bragging rights, with the US dollar index winning on a 0.2% gain to 81.49. The Chinese PMI helped turn the Aussie around, and it's up 0.4% to US$0.9012. Gold also went up, counterintuitively, by US$9.50 to US$1375.40/oz.

For the most part, base metals were a tad stronger in London last night. The exceptions were lead, which fell slightly, and aluminium, which dropped 1%. The world has been waiting for the impact of new US regulations, which will prevent investment banks from dealing in physical commodities, on aluminium. In theory, the metal should have tanked a month ago, but it has defied gravity so far.

The positive Chinese PMI is good for oil, but in the case of West Texas there appears to have been a catch-up last night after traders elected not to roll forward positions across the Fed minutes release. WTI rose US$1.25 to US$105.10/bbl while Brent managed only US10c to US$109.90/bbl.

Spot iron ore fell US10c to US$137.70/t.

Following yesterday's dip and recovery on Bridge Street, the ASX 200 is setting to fly out of the blocks this morning after the SPI Overnight closed up 43 points or 0.9%.

Guess what? There's another million profit reports out today. Fun for everyone. Today sees Crown ((CWN)), Lend Lease ((LLC)) and Mirvac ((MGR)) among the many. Please refer to the FNArena Calendar.

Mexicans take note: Rudi is in Melbourne today and tomorrow at the Trading and Investing Expo, being held at the Melbourne Convention and Exhibition Centre, and will be presenting at 10.45am on the subject of "What Works In The Share Market?". Get along and say hi, he might be bored.