The German finance minister added that all ideas would be looked at in order to boost sustainable growth. I mean, there is nothing wrong with the German economy but he was probably thinking more along the lines of infrastructure development aid to less developed European economies. So for instance the EU overnight announced an acceleration in infrastructure development aid to Spain – about €1 billion. As if on cue, European construction orders out last night showed a 12 per cent surge in March (although that was after a 10 per cent fall) and investors must have relaxed a bit as well, because France sold off €8.9 billion of 3-month and 12-month bills at lower yields than in April – 0.07 per cent to 0.168 per cent.
So the Dax rose 0.95 per cent, the CaC was up 0.6 per cent and the FTSE 0.7 per cent – reasonably modest moves all things considered, but a good change. Over in the US, stocks pushed higher from the open and maintained that trajectory pretty much throughout the whole session. They even managed to outperform European markets, with the S&P500 rising 1.6 per cent (1315) at the bell led by basic materials ( 3.15), tech and industrials. Indeed, only telecoms ended in the red.
Now that move in basic materials was interesting, huge, and I suspect it had a lot to do with comments from Chinese Premier Wen Jiabao. He suggested that China would takes measures to support growth and you can probably guess that, and in conjunction with comments from European politicians, commodity markets loved it – crude was up 1.6 per cent on WTI ($93) and 2 per cent on Brent ($109). In the metals space copper then rose 1 per cent, although gold was off smalls at $1592. Otherwise we saw the Dow up 1.1 per cent (12504) and the Nasdaq rose 2.5 per cent (2847), while the Aussie SPI was 0.9 per cent higher (4110).
Elsewhere price action wasn’t so exciting. As is often the case when risk appetite lifts, the US dollar eased and so it was last night. So we saw Australian dollar up 70 pips to $US0.9910, the euro rose 40 pips to $US1.2809, pound sterling lifted 30 pips to $US1.5832 while the yen was at $US79.31. Then in the debt space things were even more subdued and US Treasury yields did little, with the 10-year yield at 1.74 per cent, while the 5-year was down about one basis point to 0.742 per cent and the 2-year was down a bit to 0.2864. Aussie futures had a little more action, and were 4-5 ticks lower with the 3s at 97.53 and the 10s at 96.86.
That’s it by and large, there wasn’t really any data other than those construction figures. So, looking at the day ahead, we get nothing of note today and the first decent data comes out this evening with UK public finance numbers, CPI and retail spending. In terms of US data, it’s worth watching the Richmond Fed manufacturing survey and existing home sales.