Today's Morning Report

U.S. Overnight Market Commentary 

Stocks rallied, sending benchmark indexes to their biggest gains in two weeks, after economic reports from China, Japan and Australia showed accelerating growth. The euro strengthened a third day, gold fell and Treasuries extended losses after a 30-year bond sale. The Standard & Poor’s 500 Index increased 3% to 1,086.84 at 4 p.m. in New York and the MSCI World Index advanced 2.4%, the biggest gains since May 27. The euro surged 1.1% to US$1.2114, while the New Zealand dollar strengthened versus all 16 of its most-traded peers and Australia’s dollar rose against all but the so-called kiwi. Oil climbed to a four- week high. Ten-year Treasury yields jumped 14 basis points to 3.32%, the biggest increase since May 27. The largest rise in China exports in six years bolstered confidence the fastest-growing major economy will continue to fuel the global recovery. Japan expanded at an annualised 5% rate in the first quarter. Demand for riskier assets also was stoked as the European Central Bank raised its euro- region growth forecast and planned to extend offerings of cash and keep buying government bonds to fight the debt crisis. “China’s export numbers are looking better than expected and the European situation is beginning to stabilise so investors are less worried,” said Michael Holland, who oversees more than US$4 billion as chairman of Holland & Co. in New York. “Plus the selloff yesterday didn’t make a lot of economic sense so that set us up for a pop today.” The S&P 500 fell 0.6% yesterday as a late-day slide wiped out an early 1.5% rally. Today’s gains came as more Americans than anticipated filed applications for unemployment benefits last week, a sign firings remain elevated. Initial jobless claims dropped by 3,000 to 456,000, Labor Department figures showed. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. Caterpillar Inc., Chevron Corp. and American Express Co. climbed at least 4.8% to lead the Dow Jones Industrial Average up 273.28 points, or 2.8%, to 10,172.53 after the gauge closed below 10,000 for four straight days. Goldman Sachs Group Inc. fell 2.2% to US$133.77, the lowest in more than a year, on reports that the Securities and Exchange Commission is probing the firm’s US$2 billion Hudson Mezzanine collateralised debt obligation. The stock posted the biggest of only four declines in the S&P 500.

Europe’s Overnight Market Commentary

European shares rose on Thursday, helped by strong Chinese trade data while concerns over Europe's debt eased after positive comments from China's national pension fund on the euro and strong demand at a Spanish debt auction. Investors were bracing for the European Central Bank's news conference, expected to start at 1230 GMT, after it kept interest rates on hold. The Bank of England also kept rates on hold and left its £200 billion of quantitative easing purchases unchanged on Thursday, as expected. At 1153 GMT, the FTSEurofirst 300 index of top European shares was up 0.6% at 1,004.35 points, after reversing an early decline. Data showed China's exports surged in May while imports also grew robustly, reassuring investors about the economy's momentum despite government steps to cool the red-hot property market. Also lifting investor confidence in Europe, the Chinese national pension fund chief said the euro would be able to weather the sovereign debt crisis, triggering a rebound in the euro from the day's lows, while Spain sold €3.9 billion of new three-year government bonds on Thursday, which analysts said met with strong demand. The Thomson Reuters Peripheral Eurozone Countries Index rose 1.1%. Banking stocks -- Europe's worst performers so far this year -- gained ground, with BBVA up 1.8%, Banco Popolare up 1.9% and BNP Paribas up 1.8%. Investors braced for the ECB's press conference, during which it will face a grilling on the region's debt crisis after a hectic month in which it has abandoned resistance to buying government debt and flung its exit strategy into reverse. "ECB's 'fighting-inflation' focus over the past decade has been a failure, debt-to-GDP ratios in the euro zone have exploded," said Yves Bonzon, chief investment officer of Pictet. "Allowing inflation to creep up would help growth." Shares in oil major BP dropped 4.8% -- extending their slump to more than 40% since its oil spill in the Gulf of Mexico started in mid-April -- as the company faces mounting pressure from U.S. officials to suspend their dividend and fears grow of tighter regulation of the industry in the wake of the disaster.

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Hanuman Investments Pty Limited trading as Hanuman Private Wealth - AFSL No. 313416

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