Markets on the move

Many may remember the tech wreck of 1999 and 2000 only to be followed by the September 11 events. It felt like volatility would never end.

Source: Bloomberg

Suddenly, after all this volatility, on 10 March 2003, the markets posted a reversal week on a global scale and the rally begun. The indices lows were never breached in the following years. At the time, I heard someone say to get ready for the greatest bull market ever. In that one week, volatility changed to the upside.

Why? Following the recessions in Europe and the US, global growth was showing some green shoots of optimism. To this day, I still wonder how he knew that a new bull market was underway.

On 9 March 2009, the global financial crisis (GFC) ended and the indices lows have never been breached with volatile periods and lazy multi-year gains in the US and Australia.

The question on every trader’s mind should be: do we have a multi-decade bull market underway?

Price retracement only seems to last hours not days, with gains being made across asset classes.

So while the US enjoyed a President’s Holiday, the US futures have made a 41-point gain on top of the record close on Friday night. This is small signal again that a true bull market is underway. No economic news and pending bad news from the European pact via the potential debt default in Greece and the Populist Party election in France lead by Marine Le Penn has failed to play out in the VIX. Volatility still sits at record lows of 11.50.

Overnight, copper continues to be bid over the key $2.70lb level, and last night it was trading around $2.76lb. Freeport-McMoRan has failed to negotiate a deal with the Indonesian government on permits for the Grasberg mine, which now threatens the global supply of copper, along with the closure of BHP’s Escondida mine in Chile now in its 12th day. The potential is that copper may find a bid up to $3.0lb, or around $8000/ton, on the LME close, taking after the heady days of the 2007 highs.

BHP will provide its first half update today. Expectations are for a seven-fold increase in 1H profit, with a net income of $3 billion and a reduction in debt to $22 billion.

Today will see Monadelphous (MND) report, which will provide some insight into the mining services area. After several years of cost cutting and rationalisation, they’re now facing rising commodities prices.

The overnight BHP ADR shows $26.20 down 27 cents from yesterday’s close. CBA is also looking to open lower at $85.58 down from last trade at $85.91.

Our futures are showing a five-point fall after trading with no direction overnight. Current reporting today will provide further catalyst for the market this week. Finally, oil remains steady at $53.41 along with gold at $1237

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