Shares around the world rose solidly last week thanks to optimism regarding Greece, with the Australian market hitting a six year high, while there were new all time highs touched in the US on Friday night and in Germany as well.
Thanks to a new Ukraine ceasefire deal, more global monetary easing (the latest being Sweden), a surprise pick-up in Eurozone growth and good earnings results, investors piled into shares – in Australia our market’s 2.3% surge on Friday was enough to push the market to a small gain of 1% for the week.
That was after four weak days of trading as fears about the economy, earnings and oil prices, as well as those concerns about Greece infected investor confidence.
But it was Rio Tinto’s $2 billion buyback (not the biggest surprise of the past year, given there was so many stories forecasting it before the announcement) which triggered Friday’s $40 billion gain.
Offshore, US shares rose 2%, European shares gained 1.5%, Japanese shares rose 1.5% and Chinese shares added 4.2%, reversing the previous week’s losses.
The strong start to the earnings reporting season in Australia combined with expectations for more interest rates cuts have now helped push Australian shares up 8.6% year to date to a new post GFC high.
Reflecting the risk on the eurozone, bond yields rose as did oil and copper prices. The $A fell slightly partly in response to a weak jobs report and ended around 77.60 USc.
And there should be a solid start this morning on the ASX with share futures tipping a gain of around 30 points at the opening.
But investors here and in Asia will play it safe today with the US market closed tonight for a public holiday for President’s Day, while many markets in Asia will be shut this week because of the Lunar New Year and the Spring Festival.
With those talks on Greece’s bailout resuming tonight, there’s every chance market volatility will jump for a day or so.
So the gain today won’t be as strong as we saw on Friday when the ASX 200 jumped 134 points to end at 5,877.5. The All Ordinaries index added 127.8 points, or 2.2%, to 5,835.5.
The ASX 200 finished the week 57.3 points higher for a 1% gain, the All Ordinaries index was up 1.1%.
In the US the market ended with small gains on Saturday morning, our time, but they were enough to push into record territory.
The S&P 500 and Russell 2,000 closed at record levels, while the Dow Jones Industrial Average finished above 18,000 for the first time this year.
And the Nasdaq Composite ended at its highest level since March 2000.
The S&P 500 closed near its intraday record, adding 8.51 points, or 0.4%, to 2,096.99. Over the week, it rose 2%.
The Dow added 46.97 points, or 0.3%, to 1,8019.35, and added 1.1% over the week.
The Nasdaq Composite rose 0.8%, to 4,893.84, and closed up more than 3% over the week.
And the Russell 2000 (which covers small and medium cap stocks in the US) added 0.6%, to 1,223.12 and was up 1.5% over the week.
The 10-year US Treasury yield finished higher for the second week in a row Friday.
The US 10-year yield closed at 2.019% Friday, up 3.6 basis points from Thursday’s closing level, and up 34 points (0.34%) over the past two weeks.
