It was a massive night for global markets as stronger-than-expected economic data from all angles boosted sentiment and ECB president Trichet’s comments that markets are underestimating the EU’s determination to resolve the sovereign debt crisis saw markets surge.
Reuters also reported that the US was looking to increase their contribution to the IMF to further help the European crisis.
The concentrated Dow Jones Industrial Average was the best performer, adding 2.3% while the broad-based S&P 500 rose 2.2% and the NASDAQ gained 2.1%.
Across the Asian region, markets are all firmly higher following the very positive overnight leads from both sides of the Atlantic. As at 05:15, Japan’s Nikkei 225 is the top performer, up 1.8% after outperforming strongly during the month of November, rising more than 8%. Elsewhere, the Shanghai Composite, Kospi and Hang Seng are all higher between 0.9% and 1.6%.
In Australia, the ASX 200 closed 1.96% firmer at 4676, just off its highs of the session. Gains for the day are broad based with the growth-focused materials and energy sectors leading the market higher after yesterday’s strong economic data from China, Europe and the US.
There are no doubts Trichet’s soothing words and yesterday’s synchronized pickup in economic data have been the catalyst for today’s broad-based rally. Suddenly risk is back on the agenda but the big question is how long it will last. For a strong run into Christmas, we’re going to need to see widespread participation, a willingness to let profits run and a ‘fear of missing out’ mentality developing.
Yesterday’s rally looks to be different from recent false starts; it’s the first time in a while we’ve seen the market open higher and build on gains as opposed to selling off. This indicates that traders aren’t looking to book short-term profits and suggests there is enough buying to sustain current levels.
Tonight’s jobless claims and tomorrow’s non-farm payrolls numbers will be looked upon to confirm the recent uptick in US data. Stronger-than-expected numbers will add even more fuel to the fire.
The bullish performance on Wall Street and the follow on from Asian markets looks set to help drive European stocks higher once again as Thursday's session gets underway. Once again there's a flurry of economic data on the agenda that could provide further direction in the coming hours - eurozone GDP and PPI, the ECB's latest rate verdict, UK construction PMI and the US pending home sales readings are just some of the likely highlights.
Earnings news is also worth keeping an eye on with Kingfisher and TUI Travel due in London, plus numbers from a raft of US retailers for November due, again something that will give a general feel for consumer demand as Christmas approaches. After a big jump higher the usual, expectation is for a degree of profit-taking but right now this rally could still have some legs.
Ahead of the open we're calling the FTSE up 24 at 5666, the DAX up 18 at 6885 and the CAC up 13 at 3682.