The market is up 62. The SFE Futures were up 59 this morning.

Dow Jones up 287. Dow Jones closed on its high of the day on a Wall St Journal article suggesting the Fed was going to announce further stimulus measures with Bernanke’s speech tonight. US markets had their biggest intraday rally of the year (having had their worst day of the year last Friday – down 274 – volatility is often a sign of a trend change). The Fed’s latest Beige Book was relatively good, with activity expanding at “a moderate pace” as opposed to the previous “modest to moderate pace”.

European markets were up with France and Spain up 2.4% and Italy up 3.5% on reports that EU officials were urgently exploring ways to rescue Spain’s banking system. Spanish bond yields fell again overnight to 6.282%. Eurozone GDP was revised overnight but was not downgraded as expected (a lack of a negative). The ECB held rates steady at 1.0% with talk of a cut of 25bp likely in July. Base Metals were mostly higher on the first day of trading this week on the LME. Gold was up 3.50$ to $1620.40. Oil was up $1.23 to $85.52. A$ rose in response to the 1Q GDP figure yesterday and a fall in the US$ as the flight to safety reversed. A$ at 99.17c.

Main points:

  • The A$ is close to parity this morning after yesterday’s Australian GDP figure (+1.3% in Q1 versus Est +0.5%). The number appears genuinely stronger than expected – household spending is the element that increased more than expected – it seems that even if consumers aren’t spending on retail sales they are spending on education, insurance, health and energy. Worth bearing in mind that the number is well out of date. GDP growth globally has deteriorated since the end of March.
  • Facebook is currently the most shorted large cap stock in US. Short interest in FB reached 5.9% yesterday. FB id down 29% since listing.
  • Brambles (BXB) is trading again having so far raised $333m or 83% of their targeted $448m capital raising, announced earlier this week. An entitlement offer to retail shareholders will open tomorrow which could raise a further $115m. The proceeds will be used to pay down debt they would have paid off if they had been able to sell their Recall business. BXB is down 2.59% to 658c. 
  • Alesco Corp (ALS) – currently in the middle of a bid from Duluxgroup upgraded FY12 profit guidance yesterday and now expects profit to be between $11.2m-$11.4m up from $9.9m-$10.7m. ALS is up 74% since the start of the year. ALS is 0.5% to 202c.
  • The AIG/HIA Performance of Construction Index fell 0.2 points to 34.7 in May. A reading below 50 signals a contraction in building activity. Commercial construction was the weakest sector falling 9.8 points to 25.4. House building activity fell 5.1 points to 28.2, the biggest decline since September 2011.
  • Australia’s unemployment rate rose to 5.1% in May as expected. The number of people in full time employment rose by 46,100 to 8.12m and part-time employment was down 7,200 to 3.43m. A rise in employment is a sign the economy is still in good shape.

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