Wall Street surprised with a solid gain overnight and this morning, boosting our market which will start more than 30 points higher on the share price futures contract.
Why? Well, try these factors:
Warren Buffett spending $US37 billion, a surprise rise in oil prices after they dipped to new six month lows, and a better day for Chinese shares, which shrugged off those weak trade figures from the weekend.
And suggestions the Fed’s rate rise might come later than sooner.
The Aussie dollar stayed over 74 US cents after a dip under that level. Besides oil, copper, gold and other commodity prices had a rare day – they all ended trading higher than when they started.
The Dow closed up 241.79 points, or 1.4%, at 17, 615.17, after being up nearly 256 points earlier. The Dow’s higher close ended a seven day losing streak, the longest for four years.
The S&P 500 jumped 26.61 points, or 1.3%, to 2,104.18 and the Nasdaq Composite Index finished up 58.25 points, or 1.2%, at 5,101.80.
China’s stock market jumped yesterday, with the Shanghai market ending up 4.5% on expectations the government will maintain its market support and talk the country’s chief market regulator will be replaced.
Comments from Federal Reserve Vice Chairman Stanley Fischer sparked talk of a slower and later start to interest rate rises instead of the widely expected September 17 kick off.
He told Bloomberg TV he doesn’t expect the first interest-rate hike from the Fed to happen until inflation returns closer to the central bank’s 2% target – its well under that level and hasn’t been near 2% since April 2012, according to US data.
Oil prices ended higher in the US and Europe despite hitting those early lows.
West Texas Intermediate crude futures for September delivery jumped $US1.09, or 2.5%, to close at $US44.96 a barrel. Earlier on Monday, the contract dropped as far as $US43.35, dropping below a six-year settlement low set in March. That was after it fell 6.9% last week.
In London, September Brent crude bumped up $US1.80, or 3.7%, to $US50.41 a barrel after an early low as well.
But despite the bounce, analysts say the reality if the outlook oil remains very weak.
Oil fell last week as a drop in US stocks inventories was offset by a rise in production and a separate rise in the number of rigs looking for oil across the US.
The weak Chinese economic data at the weekend highlighted concerns about demand, even though oil imports into China last month reached record levels.
Gold regained the $US1,100 level to end higher on the day, while copper was up more than 2%.
And finally there was Warren Buffett’s Berkshire Hathaway buying Precision Castparts Corp. for about $US32 billion, plus debt of just over5 $US5 billion. It will be the biggest deal ever for the company and Buffett.
The deal helped kick share prices higher on increased speculation about other takeover targets. This deal will rule Berkshire out of big deals for a year or more, although Buffett told the media overnight the company would make some smaller deals in the next six months.
