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S&P/ASX 200 expected to surge 100 points after strong late rally in the US

S&P/ASX 200 appears set for a strong day with the SPI 200 implying a 100 point gain.
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S&P/ASX 200 should benefit from a return to confidence in US markets

S&P/ASX 200 appears set for a strong day with the ASX SPI 200 pointing to a positive open, pointing to a 100 point rally, implying an increase of 1.7%.

This comes on the back of a confident finish to trading in the US, as the Dow increased from circa 24,240 points with 90 minutes of trading remaining to close at 24,912 points.

However, this strong finish was too late to positively impact European markets which had closed before the rally.

Too late for Europe

The volatility that started in the US and rubbed off on to Asia-Pacific markets yesterday also took its toll in the UK and broader European region.

The FTSE 100 plunged from the previous day’s close of 7335 points to 7079 points on the open, but it rallied in mid-afternoon trading to circa 7250 points.

However, the recovery was short lived with the index finishing down 2.6% at 7141 points.

It was a similar story in mainland European markets with both the Dax and the Paris CAC 40 down circa 2.3%.

Credit Suisse bails out of VelocityShares

Ironically, amidst this volatility Credit Suisse has taken the decision to liquidate its exchange traded note that was designed to bet against rising volatility.

The VelocityShares Daily Inverse VIX Short-Term ETN lost more than 80% of its value in after hours trading, triggering a technical liquidation.

Shares in Credit Suisse Group AG (CSGN) finished down 6%.

US plunges then recovers

The Dow continued its downward spiral on the open, falling more than 4% from the previous day’s close of 24,345 points to a low of 23,778 points.

However, all of this was recovered plus some as the index finished circa 2.3% higher to close at 24,913 points.

There were strong performances from Dow DuPont (+6%), Home Depot Inc (+4.5%) and Apple Inc (+4.2%).

Goldman Sachs Group Inc was the best of the financials, gaining 3.8%.

Tech stocks generally kept pace with industrials with the NASDAQ gaining 2.1% to close above 7100 points.

Commodities trend lower across-the-board

On the commodities front there was nowhere to hide.

Gold, usually a safe haven when markets are volatile, fell nearly 1% to circa US$1320 per ounce after trading as high as $1349 per ounce in early morning trading.

This appeared to mirror equities markets which fell sharply in early morning trading but showed signs of recovery throughout the day to regather some of the lost ground.

Oil was down nearly 1% to US$63.55 per barrel.

Base metals all trend lower

Among the base metals, copper was the best performer but came off circa 1% to close in the vicinity of US$3.20 per pound.

Nickel was more volatile, falling nearly 3% to US$6.06 per pound.

Even zinc felt the pinch falling 2.5%, taking it below the psychological US$1.60 per pound mark.

Iron ore rallied slightly to finish at US$75.92 per tonne.

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