Coming off the back of a solid week here and offshore for equities last week, the local market should start on a slightly more confident tone today.
The ASX 200 share price index closed up 9 points on Saturday morning, pointing a small gain at the start today.
But watch for the negative impact of lower gold prices on the likes of Newcrest and other gold miners.
Wall Street made gains, as did markets in Europe and Asia, with booming Tokyo leading the way.
Even the Chinese market managed a second successive week of gains.
In the US, the Dow added 35.87 points to 15,118.49, its highest close ever on Friday to be up 1% for the week.
The S&P 500 added 7.03 points to 1,633.70, for a 1.2% gain and Nasdaq ended at 3,436.58, up 27.41 points and the highest level for a decade: it added 1.7% for the week.
US Treasury prices fell, with the yield on the benchmark 10-year bonds rising to 1.899% as the dollar rose and confidence increased about the US economy.
After the Reserve Bank joined the European Central Bank and the Bank of Korea in cutting rates so far this month, Vietnam and Sri Lanka also cut key official rates last week.
At the end of the second week of May, the Standard & Poor’s 500 index is up 2.3% and 14.6% for the year so far.
US earnings reports this week will be important for the retail sector with the likes of industry giant, Wal-Mart to report on Thursday, after quarterly reports from Macy’s, Nordtsrom, Kohl’s and the loss-making JC Penny’s.
Thomson Reuters said at the weekend that with 89% of the S&P 500 companies having reported earnings so far, 66.7% have topped profit expectations, above the average of 63% since 1994. However, only 46.4% percent have beaten revenue expectations, well under the average of 62% since 2002, Thomson Reuters added.
In Australia, the S&P/ASX 200 rose 76.6 points, or 1.5%, to 5206.1 points, while the wider All Ordinaries Index jumped 85.7 points, or 1.7% to end at 5191.1 points.
In China the market had a second positive week in a row.
The key Shanghai index added 0.6% on Friday to finish the week up 1.9% and cut the losses since the market peaked in February to 7.7%.
The solid trade data helped support confidence, but today’s release of more data for April on production, retail sales and investment will provide another hurdle for local investors to overcome.
But the Japanese market was the star on Friday and for the week thanks to the continued weakening of the yen and the solid confidence being shown by more and more companies reporting better than expected profits for the March quarter, and boosting their estimates for the 2013-14 financial year which ends on March 3, 2014.
Japan’s booming market shows no let up
Japan’s benchmark Nikkei index rose 2.9% on Friday, taking its gain for the shortened trading week to 6.7%, the biggest weekly rise in more than three years. The Nikkei is up more than 22% for the year so far. Japan’s strength has seen the MSCI Asia Pacific index rise 10% so far this year.
Losses or weaker rises in Australia, South Korea, Taiwan and other Asian markets have limited the overall rise because the yen’s weakness is driving up other currencies and crimping exporters, especially in Taiwan and South Korea.
In Europe, most markets rose last week and the Stoxx Europe 600 Index gained 1.3% for the week to be up by just over 9% for the year so far – not a bad effort for a region still deeply recessed or sluggish at best.
Every major western-European market, bar Spain, rose last week.
London’s FTSE 100 added 1.6% (and hit new five year highs), France’s CAC 40 rose 1% and Germany’s DAX jumped 1.9% (and also hit new five year highs).
