By Greg Peel

The Dow rose 148 points or 1.3% to 12,040, the S&P rose 21 points or 1.7% to 1307, and the Nasdaq jumped 1.9%.

They're only numbers, just like any other numbers, but round numbers serve as benchmarks and as such become psychological levels. Last night the Dow closed above 12,000 for the first time since June 2008 and likewise the more realistic S&P 500 claimed the 1300 mark.

Had there been turmoil in Egypt overnight these peaks would probably not have been conquered, but the “million man march” in Cairo was peaceful, the army did not respond, and as I write we await fresh word from President Mubarak on his plans. Such scenes, including globally recognisable V signs being made by protesters to television cameras, gave global markets confidence overnight to concentrate on economic matters elsewhere. And at the forefront were global manufacturing sector data.

Around the grounds, Australia's manufacturing purchasing managers' index (PMI) rose to 46.7 in January from 46.3 in December, China's to 54.5 (54.4), the UK's to 62.0 (58.7), the eurozone's to 57.3 (57.1) and in the US to 60.8 (58.5).

The Chinese number here is the independent report provided by HSBC. Beijing's official number saw a fall to 53.9 from 54.9 to probably suggest monetary policy is working. The numbers aren't different enough to quibble too much about.

The stand-out in the figures are the very strong results from the “developed” world. These numbers represent rates of growth, with 50.0 being flat growth. The US number was a shock and is the highest since 2004. The UK number is even higher, and that economy is suffering from strict austerity measures. China's growth, on the other hand, is now slower than The West. Australia's sector is not big enough to be globally important, but domestically ongoing contraction is simply another reason the RBA will stay on hold for some time. And from the monetary policy perspective, we can see which side of the world is stimulating with easy policy and which side is tightening the reins.

US new vehicle sales jumped 18% in January, led by GM and Chrysler which both had to be bailed out in 2008. December construction spending nevertheless fell by 2.5% when a 0.1% gain was expected. That's a big drop, and the second consecutive month of falls. Is America spending in the right places?

Across the globe, the current fear is one of inflation. Such manufacturing numbers only fuel this fire, as do oil prices over US$100/bbl (Brent, Tapis). The Fed is still fighting deflation with QE2 however and is expected to be the last central bank to raise rates. Hence last night European currencies forged ahead, the US dollar index fell by 1% to 77.00, and the Aussie jumped 1.5% to US$1.0121.

The Aussie's rise was assisted by the RBA's statement which suggested flood impact on GDP would only be temporary.

On a weaker greenback, gold gained US$9.80 to US$1340.90/oz. WTI oil eased however given relative peace in Egypt, falling US$1.42 to US$90.77/bbl. Copper nevertheless powered on to a new record above the US$4.50/lb mark on a 2% rise, with the rest of the base metals mostly stronger as well.

The benchmark US ten-year bond yield has been relatively steady of late, closing last night at 3.44%. It is the thirty-year yield which has been on a run, reflecting a stronger US economy and inflation pressures. The Fed's buying mostly tens and shorter, although it has snuck in a few thirties as well.

The SPI Overnight gained 42 points or 0.9%.

The breaking news is that Mubarak has agreed not contest the September election, but he provided no suggestion of stepping down earlier – as in right now. This will not please the Egyptian people.

Today begins celebrations for the Chinese New Year of the Rabbit. Chinese markets will be closed until Monday.

Kung Hei Fat Choy!

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