By Greg Peel

The Dow closed up 65 points or 0.5% while the S&P gained 0.5% to 1348 and the Nasdaq added 0.6%.

A loss of 22,100 jobs in Australia in April came as somewhat of a surprise yesterday to local economists and probably caused Wayne Swan to grimace. Economists had been expecting a gain but the unemployment rate remained at 4.9% and monthly numbers can be volatile.

On a global perspective however, the result combined with a lower than expected growth result for UK industrial production, a contraction in eurozone industrial production for the first time in six months, and a US retail sales growth rate of 0.5% which was the weakest since December. Take out petrol and autos, and sales were only 0.2% higher.

It's only one set of data but the signs are becoming clear that global growth is slowing from an earlier hectic, rebound pace. And we know that China and now India are doing their best to rein in their own runaway growth.

The Dow opened down nearly 100 points last night on a “more of the same” from the night before and little support from data. Commodities were lower again, and the US dollar was higher, but just when it looked like another rout was on the cards things began to turn around. The US dollar began to fall and commodity prices started to recoup losses. Consolidation? The stock market fired up.

The 65 point gain in the Dow on the day thus represented a rally of over 150 points. It looked like the funds came back in to buy base metals in London, given an almost uniform 1.5% gain across the spectrum. Oil also managed to struggle higher by the close, with Brent up US41c to US$112.98/bbl and West Texas up US60c to US$98.80/bbl.

It's not every day you see precious metals argue, but gold managed a US$5.00 gain to US$1506.60/oz while silver fell another 1.3% to US$34.66. We are reminded that as silver was running away fast over the course of this year, it was leaving gold behind.

Last night's US Treasury auction was a real fizzer, which belied strong demand in the previous two sessions. There was US$16bn of thirty-year bonds on offer but with yields as low as they are, and thirty year bet on US debt a dodgy prospect, the buyers stayed away in droves. The settlement yield of 4.38% was about five basis points higher than expected, yet still the lowest auction level since December. Foreign central bank buyers were hard to find and they took only 33% compared to a running average of 40%.

So far “Sell in May” has never rung more true, but despite the extreme volatility seen in commodity markets over the past several sessions stock market volatility, as measured by the VIX, remains at a tepid 17. There is no panic rush to buy protection, and longer term investors see only a speculative rout in commodities, not a fundamental one.

We may thus be seeing some consolidation after a torrid week. But be warned – funny things might happen today. Triskaidekaphobics beware.

After yesterday's carnage, the SPI Overnight is up 26 points or 0.6%.

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