The ASX is expected to open stronger today after a 1% gain in the overnight futures market on Friday night in the wake of the second day of recovery on global markets.
Friday saw eurozone share markets jump 2.7% and the US S&P 500 rise 2% as signs of more easing ahead from the ECB continued to impact along with some better manufacturing data in the US.
Bloomberg described the day as the best for global markets for more than three years.
MSCI’s world equity index climbed 2.6% as markets in Asia to Europe, Australia and America rebounded from one of the worst starts to a year on record.
And the MSCI Emerging Markets Index jumped 3.3% from a seven year low hit on Thursday.
Globally, Tokyo led the way on the day, surging 5.9% in a session.
Reflecting the positive global lead ASX 200 futures rose 55 points or 1.1%, pointing to a solid start for the Australian share market on Monday, which if it happens, would be more than twice the 0.5% rise last week, all of which flowed from Friday’s solid rise of 1.1%.
The recoveries on Thursday and Friday reserved the week’s losses – as a result US shares rose 1.4% over the week, eurozone shares added 2.3% and Chinese shares also rose 0.9%.
Despite that big surge on Friday Japanese shares still ended the week down 1.1%.
After plunging to a new low of $US26.60 a barrel the oil managed a 9% gain over the week and metal prices also rose with copper up 3%.
The ECB-inspired bounce in markets on Thursday and Friday (because investors now think the ECB will do more for markets and the euro economy from March onwards) also helped push the the Aussie dollar back up to around $US0.70, and saw bond yields mostly rise over the week.
The AMP’s chief economist Dr Shane Oliver say that, “from their highs last year to their lows in the past week many global share markets have already fallen into bear market territory (defined as a 20% decline from the high – which this time around was last year)".
Asian shares (down 28% from last year’s high) and emerging market shares (down 27%) entered bear market territory last year. Japanese shares have had a fall of 23% and eurozone shares have lost 22%. Australian shares have come close with a fall of 19% from the high in April last year but US shares have only had a decline of 13% from last year’s high.
"With global growth worries likely to linger and US shares having only had a 13% fall despite having more valuation concerns than other markets it’s too early to say that we have seen the low. So the Australian share market could yet be tipped into bear market territory,” Dr Oliver wrote in a weekend note.
