Hints and fears are giving way to hard numbers. And the numbers are very hard on the bears. Last night’s secondary reads added to the better economic outlook, and coming ahead of important numbers from the US and China over the next two sessions saw bears capitulating after initially selling US stocks down. Despite modest gains at the close, the rebound and reversal of momentum could see Asia Pacific markets add to yesterday’s strong gains.
ADP job numbers and the New York ISM index continues to show expansion. Neither are considered major news, but coming ahead of durable goods orders tonight and non-farm payrolls on Friday night they acted as a warning for those forecasting financial Armageddon. Higher appetite for risk manifested across markets, with shares, growth currencies and industrial commodities rising, and bonds selling off further.
Locally, investor’s fascination with a story about dodgy mortgage brokers was washed away by GDP data that showed the Australian economy was much stronger than estimated last quarter. The leverage of the financial sector to growth demands a re-rating of banks. Yesterday’s 3.5% surge in the bank sector may be just the beginning. Energy stocks are also a likely focus today, after another night of stable oil trading.