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Apple, Inc. Sends Equity Markets Higher During Extended Trading Hours

James Hyerczyk from ForexHound.com at 10/20/09


Much better than expected earnings from Apple, Inc. is helping to drive U.S. stock index futures higher after the close.  This rally comes on the heels of a strong day session which saw equity futures rise to a new high for the year after several companies reported better than expected earnings or gave favorable future guidance.  With no place to get a better return, investors continue to pour money into the equity markets.  Unless some major force rears its ugly head, look for the trend to continue. 


U.S. Treasury markets posted a strong gain on Monday after trading lower throughout the early part of the trading session.  Stronger demand for higher yielding assets forced Treasury Bond and Treasury Note futures lower early in the day, but these markets turned around after Fed Chairman Bernanke mentioned nothing about a tight monetary policy or higher interest rates.  Some traders had taken insurance on the opening in anticipation of Bernanke restating his comments from several days ago when he alluded that the Fed would move to a tight monetary policy once the economy started to show signs of recovery. 


The U.S. Dollar traded under pressure throughout the trading day as appetite for risk sent traders into the higher yielding currencies at the expense of the U.S. Dollar.  The most volatile currency was the December British Pound which started the day lower on speculation the Bank of England was actually considering expanding its asset buyback program.  The weakness in the Dollar, however, was too hard to overcome and the British Pound turned around to close higher.  Tomorrow the Bank of Canada meets to set short-term interest rates, but this didn’t stop traders from buying the Canadian Dollar as higher equity and crude oil markets boosted demand for higher risk assets. 


The weaker Dollar helped drive December Gold higher.  Today’s move may be showing the correlation between these two asset classes is moving back to normal.  Last week, the relationship between gold and the Dollar showed signs of divergence.  If the trading relationship returns to normal then look for December Gold to take out $1072 when the U.S. Dollar reaches a new low. 


Signs of a global economic recovery and a weaker Dollar are helping to boost December Crude Oil.  Speculators are supporting crude oil in anticipation of an increase in demand.  Gains were limited by the $80 resistance barrier.  Once this price is broken, watch for an acceleration to the upside.  Skeptical traders are still waiting for back-to-back bullish supply/demand numbers.  Last week, the inventory report showed a huge drop in gasoline inventories.  Anxious traders are waiting to see if this number was a one-time event or the start of a trend. 

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