Market optimism in Asian and European sessions was carried to early US session and pushed stocks higher. DJIA and S&P 500 indices soared more than +2% at one point. However, bulls surrendered after the ISM non-manufacturing index came in weaker than expected. Stocks pared much of the gains made earlier in the day. In the commodity sector, crude oil had a volatile day, jumping to as high as 73.86 from a 4-week low at 71.09, and then sliding again to settle at 71.98, down -0.22%. Gold slumped below 1200 as risk aversion receded. Base metals were broadly higher as the RBA reaffirmed strong demand from Asian countries.

US ISM non-manufacturing index slipped to 53.8 in June, compared with market expectations of 55 and May's 55.4, suggesting services activities in the country has expanded at a slower pace than previous months. The major worry came from the employment component which dropped to 49.7, signaling contraction.

In Canada, building permits plummeted -10.8% m/m in May, following a +5.9% increase in the prior month and +12.3% rise in March. The market had anticipated a milder drop of -0.5%. The market, however, places stronger weighs on the employment data to be released on Friday in judging health of Canada's economy.

Gold plunged -1.18% yesterday as no new bad news from the European banking system eased investors' concerns for now. Settling at 1195.1, the benchmark contract recorded its first close below 1200 for the first time since May 25. Yet, GFMS remained bullish on the yellow metal and anticipated price to surge above 1300 in 2H10, with investment demand the major price driver.

China's NDRC released a statement regarding 32 infrastructural projects in the western region of the country. The total amount of investment amounts to RMB 682.2B. While the news might have boosted market sentiment, most of the projects mentioned in the statement were in the existing government budgets. That is, there's no new government spending announced. The purpose of the Chinese government to release the statement is probably to boost market sentiment and create an optimistic investment atmosphere.

We do not rule out part of base metals' rally was driven by the above news. However, sharp fall in inventory level in some of the base metals also justified the price hike. For instance, copper stockpiles in LME's warehouse plummeted to 444.7 K tons on July 5, the lowest level since November 30.