Nikkei gains 0.9 pct, commodity-linked shares jump

UPDATE!! a/o 04:50 CDT, Euro-shares trade had risen, but by a mere 0.2% - substantially less than Asia based upon a significantly more circumspect viewpoint as admirably stated in the last paragraph below, right before the indices snapshot graphic - ergo - recent strength in US trade was clearly more a case of greenback weakness than market yeast. As if to echo the continental tone, US screen trade a hair shy of 05:00 CDT remains a hair short of +20 Dow points!! Though Tuesday’s US rally was every bit as much the result of dollar devaluation as anything else, Japan's Nikkei average rose 0.9 percent on Wednesday, with shares such as steel, metal stocks as well as trading houses making strong gains in the wake of a jump in commodity prices. A rate hike from Australia, the first G20 country to raise interest rates since the onset of the financial crisis, has underscored for many that the global economy is on the mend, spurring gains in energy and metal prices. Bank shares like Mitsubishi UFJ Financial Group advanced on continued optimism about the U.S. financial sector, while electronics conglomerate Hitachi rose on an analyst 2-notch rating upgrade. Increasing numbers of brokers are turning bullish on U.S. financials prompting investors to adjust positions in lagging Japanese financial issues. In moderate trade, Nikkei225 gained 86.45 points to 9,778.25 while the broader Topix added 1.3 percent to 883.12 Hong Kong stocks were up 1.86 percent on Wednesday, as a surge in gold and oil prices spurred demand for resources shares, while the prospect that China may increase interest rates sooner than expected lifted banks. Gold eased but hovered near record highs as the dollar's weakness and inflation worries raised the bullion's appeal as a hedge. Oil prices surged on optimism that global demand was picking up. "Generally, a lot of the moves we've seen in the past several days were related to the weakness in the U.S. dollar and this has boosted commodity H shares," said Daiwa Securities. "With China on holiday, there is actually not a lot of guidance in the Hong Kong market. It's moving a lot based on global markets. As long as global markets continue to be resilient, we think the market here will be resilient as well."

After tomorrow’s close, Alcoa, dragged down by weak demand for aluminum from aerospace and construction, is expected to report its fourth consecutive quarterly loss when it kicks off earnings season. Should AA beat street expectations to lose about 9 cents/share on estimated sales about $4.5 billion, the last two session rally should really gain a head of steam far beyond that seen thus far. This quarter last year, the company reported a profit of 33 cents/share, since then the outlook has improved slightly as its net loss is expected to be less than in the previous two quarters, with even a small profit hoped-for in the 4Q. European shares turned positive in morning trade on Wednesday, with banks and miners extending gains from Tuesday. The FTSEurofirst 300 index of top European shares was up 0.2 percent at 994.73 points. On Tuesday, the European benchmark rose 2.2 percent, its biggest one-day percentage gain in nearly two months and is up more than 53 percent from its lifetime low of March 9, as investors have become more confident on the prospects of recovery. Some analysts advised caution, arguing that much of the recent surge in equities had been due to rises for commodity shares, which had been fueled by dollar weakness. "Commodity demand isn't rising. Commodity prices are fooling us, because you have the cloak of the dollar over them. Take off the cloak and commodities will look weak," said Justin Urquhart Stewart, director at Seven Investment Management. "It's fool's gold. Growth will continue to be weak." "But every time there's a dip, there are certain mangers sitting on cash, desperate to get in. We could be in a trading range." T. W. Merryman Managing Director Interconti, Limited (Market Research Analysts) Chicago, IL 60604 e: intercon@intercontilimited.com w: www.intercontilimited.com