After a resource based panic in the Asia Pacific region, European and US markets have disdained the weak impulse and rallied into the US close. Oil prices are higher, as are industrial metals. The key issue for the Australian share market today is whether this rejection of the sell off will see some of $56 billion of value destroyed yesterday restored in trading today.
The company at the heart of the rout, Glencore, vigorously defended its solvency overnight. Resource bears were not helped by the Investec analyst who made the original Glencore call. In a television interview, he appeared less strident about the company’s prospect. Glencore shares rallied 17%. The sell-off occurred against a back drop of growth concerns centred on China. This may slow activity ahead of the release of China manufacturing, services and composite PMIs tomorrow.
Local building approvals data is estimated to show a fall of 2% for August, dragging the annualised rate down to 7.4%. Given the volatility in this series, a read well away from consensus is required to spark a reaction.
After a night of commodity related pressure, the AUD has bounced back towards 70 US cents after touching lows around 0.6932. Any further resilience in commodity sentiment could see further gains.