Hopefully, our market will start with a small gain later this morning – if the share prices futures trading on Saturday morning, our time, is any guide.
But any gain is likely to be a few points only and the question is whether this will hold, or disappear quickly as bears return for another bout of selling.
A tip is to watch the prices of the big banks especially after the CBA and Westpac joined the ANZ in correction territory last week.
They seem to be on the nose as investors reassess their earnings outlook.
But with the NAB, ANZ and Westpac balancing tomorrow night, the falls could be a bit of market playing by clever investors.
Friday night’s bounce in US and European shares markets wasn’t convincing at all – more of a brief relief rebound from what was a rotten week.
Any number of factors undermined investor confidence last week – from worries about the US Fed tapering, tough action against US companies seeking to reduce their tax by relocating outside the US, Chinese growth, geopolitical concerns in the Middle East and concerns about the real strength underpinning US share rally, according to the weekend note from the AMP’s chief economist Dr Shane Oliver.
US shares fell 1.4%, Eurozone shares fell 1.9% and Japanese shares fell 0.6% but once again Chinese shares surprised on the upside as a big change in linked trading between Hong Kong and Shanghai approaches which will boost demand for mainland shares and narrow the gap with Hong Kong prices.
So Shanghai prices rose 0.8% to remain slightly positive for the year.
In Australia, the poor global lead, falling iron ore prices and weak demand from foreign investors saw the Australian share market fall another 2.2% giving up its gains for the year.
The 119 point for the Australian market’s ASX 200 index last week wiped an estimated $36 billion from market values.
Global miner Rio Tinto fell 2.4% to $60.11 over the week, while BHP Billiton slumped 3.7% to $34.16 and Fortescue Metals lost nearly 6% to end at $3.54.
Not helping sentiment were the losses for the big four banks .
Westpac is now in correction territory (a loss of 10% or more from its previous year) after its shares fell a surprisingly big 3.9% last week to end on $31.89.
NAB shares fell 3.5% to $32.70, the Commonwealth lost 3.3% to $75.26 for the week and on Friday also hit correction status.
ANZ, which had already gone into correction prior to the week, fell a further 2.9% to $30.99.
The falling iron ore price and the rising $US saw the $A continue its slide. It ended at 87.65 USc on Saturday morning, our time, a fall of 2% over the week.
Weakening share markets saw bonds rally around the world, according to Dr Oliver.
He says this suggests in part that investors fear that talk of US rate hikes is premature.
“The outlook for relatively tighter monetary policy in the US versus other major regions saw the US dollar continue to rise, leaving it up nearly 7% over the last three months, and this is also weighing on commodity prices," he wrote on the weekend. (See separate story.)
In the US the S&P 500 rose 16.8 points on Friday night to end at 1,982.854, but ended the week 1.4% lower.
The Dow jumped 167.35 points, or 1%, to 17,113.19, but lost 1%.
The Nasdaq Composite added 45.45 points, or 1%, to 4,512.19 but lost 1.5% over the week.
Australia’s ASX 200 erased its gains for the year.
European stocks rose Friday, but major benchmarks recorded weekly losses.
The Stoxx 600 Index fell 1.8% over the week.
