US markets rebound as sentiment towards the tech and energy sectors improves

In overnight trading, US markets delivered their first convincing upward move in more than a week, rebounding from the previous day’s sell-off.

The Dow increased 0.7% or 144 points to close at 21,454 points. Negative sentiment towards the tech sector reversed as the NASDAQ surged 1.4% to close at 6234 points.

The best of the blue chips were Intel Corp. and Apple Inc, gaining circa 1.6% and 1.4% respectively.

A mix of oil and gasoline inventory and supply data came through overnight, which on balance had a positive impact on the oil price as it increased circa 1.5%.

This also helped to lift the Dow as oil and gas services stocks such as Caterpillar Inc (+2.4%) turned around recent losses.

The positive sentiment didn’t flow through to European markets with the FTSE 100 falling 0.6% to 7387 points.

Mainland European markets tended to plateau after the DAX experienced a sharp fall in the previous session. It closed at 12,647 points, representing a decline of 0.2%.

The Paris CAC 40 proved fairly resilient only falling six points to 5252 points.

Iron ore prices once again put in another strong performance, gaining 4.4% to US$62.33 per tonne.

This, combined with positive moves in the base metals sector and a relatively steady gold price should see the S&P/ASX 200 Materials index perform well when markets open this morning.

While gains in base metals weren’t outstanding, they came on the back of substantial increases in the previous session, effectively representing confirmation that investors still see upside potential.

Lead’s once again was the standout performer, gaining approximately 0.5% to close broadly in line with levels it hasn’t traded at since March.

While copper’s gain was more moderate, the fact that it has broken through the US$2.65 per pound level suggests it could soon draw the attention of technical analysts.

Nickel also posted a modest gain, but it translated into five increases out of the last six trading sessions, a solid performance for a metal that tends to be relatively volatile.

Zinc was the only base metal to lose ground, but once again it was only a nominal decline, and it is still sitting broadly in line with March/April highs.

The Australian dollar is fetching US$0.764.

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