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Wall Street rallied in the final hours of trade on Tuesday to post a positive finish across the major averages as investors bought into higher growth stocks which boosted the Nasdaq to a 0.84% gain at the closing bell. The S&P500 rose 0.45% on Tuesday and the Dow Jones reversed losses to end the day up 0.23%. Investors in the US are now bracing for key inflation data out in the US on Wednesday with the expectation of further easing of the inflation rate, while the core inflation rate month on month is expected to rise slightly.

In Europe overnight, auto stocks weighed on the key regions leading to a red finish across European markets on Tuesday. The STOXX600 fell 0.66%, Germany’s DAX lost 0.96%, the French CAC fell 0.24% and, in the UK, the FTSE100 ended the day down 0.78%. Car parts supplier Continental fell 10% on Tuesday after the company said It saw provisions in the mid double digit million-euro range due to a warranty case involving one of its brake systems, while BMW shares fell 11% on Tuesday.

Across the Asia region on Tuesday, markets were mixed as investors responded to key economic data out in the region. China’s exports grew 8.7% YoY in August and imports rose 0.5% in trade balance data out yesterday indicating recovery of output in the world’s second largest economy. China’s CSI index closed flat on Tuesday, South Korea’s Kospi index fell 0.5%, Japan’s Nikkei rose 0.16% and Hong Kong’s Hang Seng ended the day up 0.37%.

The ASX had a strong rally on Tuesday with a 0.3% gain at the closing bell to hit 8011.898 points, on the back of the US rally on Monday as investors assessed key Westpac consumer confidence data and NAB business confidence data released yesterday.

Westpac consumer confidence data for September out on Tuesday came in at a fall of 0.5% which was less than economists were expecting (1.2%), but still indicated a slide from August as consumer confidence was hit by the sluggish GDP growth in Q2 for Australia and the overall stability of the Australian economy.

NAB Business confidence data for August also out yesterday indicated business confidence fell 3 points in August to -4 index points, compared to market expectations of a rise to 3 points.

The slide in business confidence was driven by declining employment and cost inputs eating away at margins.

Iron ore miners had a reverse of Monday’s start to the week with a boost yesterday on the back of a rise in the price of the commodity on news that improved seasonal demand for steel in China and hopes of stimulus out of Beijing will drive material demand increase for the coming months.

According to the consultancy Mysteel, September is usually a high-demand period for steel in China. However, last week saw lower demand due to concerns about both the Chinese and US economies.

CBA rallied to all time high yesterday as the big banks rallied again, while Life360 pulled back yesterday after the stock traded lower on the Nasdaq overnight, and an early investor and independent non-executive director sold 100,000 shares worth $3.7m.

What to watch today:

• Ahead of the midweek trading session on the ASX, the SPI futures are anticipating the local market to open the day up 0.1% following Wall Street’s rally overnight.
• On the commodities front this morning, oil has tumbled overnight to trade 4% lower at US$65.96/barrel, gold is up 0.4% at US$2515.85/ounce and iron ore is up 0.16% at US$91.76/tonne.
• The Aussie dollar has slightly strengthened against the greenback overnight to buy US$0.66 cents, 94.81 Japanese Yen, 50.88 British Pence and NZ$1.08 

Trading Ideas:

• And Trading Central has identified a bullish signal on Lycopodium (ASX:LYL) following the formation of a pattern over a period of 16-days which is roughly the same amount of time the share price may rise from the close of $12.22 to the range of $14.60 to $15.10 according to the standard principles of technical analysis.