The S&P 500 VIX volatility index has pulled back to 13.8, close to a full standard deviation below its long term average of 21.5. China’s trade data provided support to commodities overnight with both iron ore and copper gaining. The pickup in China’s imports provide further evidence of its return to investment-driven fiscal stimulus, providing some fundamental support to the recent moves in commodities, emerging markets and the Aussie dollar.
This is all pointing to a strong open to the Asian session. The yen has seen a bit of weakness with the USDJPY moving back to the 109 handle, and this should help move the Nikkei strongly higher today (our current call is +1.5%). The materials sector in the FTSE had a wild night as it gained over 5%, and BHP and RIO both had spectacular nights as they rose 9.2% and 7.6%, respectively. The ASX is subsequently looking to have a very strong day, we currently are calling for it to open 0.9% higher. But the fact that investor appetite for the heavily-weighted banking sector looks to be returning could help see an even stronger day. The key focus in Australia will be the often volatile monthly employment numbers with the market expecting 15,900 new jobs, which would be quite a jump from the previous three months.