\n\tBy Greg Peel<\/p>\n
\n\tThe Dow closed up 109 points, or 0.7%, while the S&P gained 0.8% to 1639 and the Nasdaq<\/span> added 0.8%.<\/p>\n \n\tHas the Australian stock market found a floor? Yesterday’s 80 point range on the ASX<\/span> 200 was a rare event featuring a stark turnaround late morning after a weak, Wall Street-driven start. Following Wall Street to the letter is not a great idea at the moment – that way madness lies. It nevertheless made sense to see a weak open after Friday’s short-covering surge, but with the banks having reached levels of more reasonable value, and attractive yield, it appears perhaps the market in general has corrected enough for now. The specific link with the Aussie is broken, with the currency now bouncing on the spot rather than tanking.<\/p>\n \n\tAs for Wall Street: down big on Wednesday, up big on Thursday, down big on Friday, and now up big on Monday. And where are we left? Well Wall Street has not really moved much in June on a net basis. The smart money is staying out ahead of the Fed policy statement on Wednesday night, not necessarily because of fear of what Bernanke may or may not say, but because it is clear the lunatics could run wild depending on the outcome. Thereafter the dust can settle, but right now Wall Street is jumping at every shadow and thin volumes are exacerbating the volatility.<\/p>\n \n\tLast week it was a Wall Street Journal article that appeared to suggest no tapering, and thus fired up the sugar addicts, although a closer read reveals the author did not rule out tapering. Last night stocks rallied again from the open as the WSJ article became gospel, until a Financial Times article posted in the afternoon suggested the Fed will<\/em> announce tapering. The Dow was up 190 points at that stage, and up only 40 an hour later after the panic merchants ran riot.<\/p>\n \n\tBut wait. The author of said FT article then tweeted to explain that the article reflected only his own opinion. He did not have an inside line to the FOMC<\/span>. So the indices went back up again.<\/p>\n \n\tIt is not like the US bond market to jump at shadows in the same way the stock market does, but last night bonds responded to the FT article and did not rebound. The ten-year yield rose 5 basis points to 2.17%.<\/p>\n \n\tWednesday night cannot come soon enough.<\/p>\n \n\tBack in the real world, Wall Street was also encouraged by the morning’s economic data releases. The Empire State manufacturing index, measuring New York state activity, has risen to plus 7.8 from minus 1.4 in May. More exciting, nonetheless, was the NAHB<\/span> measure of housing market sentiment, which has risen to 52 from 44 in May. This is the highest reading since 2006.<\/p>\n \n\tAfter the GFC<\/span>, the sentiment measure fell into the teens and banged along the bottom for a couple of years before finally starting to rise again. The NABH<\/span> index is similar to a PMI in that 50 is the neutral point. Thus up until this month, sentiment has been gradually becoming less negative. Now, for the first time in seven years, it has actually turned positive.<\/p>\n \n\tThe US dollar snapped a four-day losing streak against the yen last night after the Nikkei rallied 2.7% yesterday and yen selling returned. The dollar index is steady at 80.61 and the Aussie is off a little to US$0.9559.<\/p>\n \n\tWith the greenback steady commodities were able to do the sensible thing ahead of Wednesday night – not much. Base metals were all lower in London, but by minimal amounts. Gold fell US$4.50 to US$1385.60\/oz, Brent crude fell US33c<\/span> to US$105.62\/bbl<\/span> and West Texas crude rose all of US2c<\/span> to US$97.87\/bbl<\/span>.<\/p>\n \n\tPerhaps iron ore only needed the Chinese to return and recover from their Dragon Boat holiday – the spot price is up another US$1.40 to US$115.00\/t.<\/p>\n \n\tThe SPI<\/span> Overnight rose 11 points, or 0.2%, but has not offered much in the way of viable prediction this past week or so.<\/p>\n \n\tToday the RBA<\/span> will release the minutes of its last meeting and will no doubt make the headlines. China will release property price data and tonight the eurozone’s<\/span> ZEW<\/span> investor sentiment survey will be closely watched.<\/p>\n \n\tTonight the US will release housing starts as well as the CPI, and no doubt some journo<\/span> will write an article and Wall Street will erupt into a frenzy.<\/p>\n \n\tNot that I would ever knock journos<\/span>, of course. \n\tAll overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX<\/span> and more available in the FNArena Cockpit. Click here<\/a>. (Subscribers can access prices in the Cockpit.)<\/em><\/p>\n \n\tAll paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.<\/em><\/p>\n
\n\t <\/p>\n