Global markets finished in the green overnight Friday, setting up our market for a solid 30 to 40 point rise when trading re-opens on the ASX later this morning.
The past week saw a strengthening recovery in demand for risk assets with shares pushing higher, bond yields rising, demand for junk bonds returning in the US, currencies rising in emerging markets, commodities rebounding and pushing the Aussie dollar pushing back over 74 US cents.
For the week US shares rose 2.7%, Eurozone shares gained 3.5%, Japanese shares rose 5.1%, Chinese shares rose 3.9% and Australian shares gained a solid 4.3%.
From their recent lows US and global shares are up 9%, Australian shares are up 7%, oil is up 37%, the $A is up 8% and iron ore is up 34%.
Friday saw eurozone shares gain 0.6% and the US S&P 500 rise 0.3% as news of strong US jobs growth and slow wage growth added to confidence that the US economy is doing well, but that the Fed can continue to delay raising interest rates.
The AMP’s Chief Economist Dr Shane Oliver said at the weekend, “Maybe these rallies are telling us that all the handwringing over global growth was overdone”.
The S&P 500, Nasdaq and Dow closed at two-month highs early Saturday, while posting their third consecutive weekly rise, thanks again to the rally in oil, and now other commodities.
The better-than-expected jobs for February, with 242,000 new jobs reported and an extra 30,000 for January and December (plus a small fall in wages) underlined continued improvement in the US economy, and raised expectations for at least another interest-rate increase by the Federal Reserve, but much later in the year. The jobless rate remained steady on 4.9%
The S&P 500 rose 6.6 points, or 0.3%, to 1,999.99. The index rose 2.7% over the week and is up 9.4% from its low, set on February 11.
The Dow added 62.87 points, or 0.4%, to settle at 17,006.77, and the Nasdaq Composite rose 9.6 points, or 0.2%, to close at 4,717.02.
Both the Dow and the S&P posted their highest closes since January 5, while Nasdaq ended at its highest close since January 6.
Another solid week and they will hit 2016 highs.
The three main indexes initially retreated in the wake of the jobs report, which painted a strong picture of the labor market, but also showed areas of weakness. But they recovered in late trading to finish in positive territory. Across the Atlantic, the Euro Stoxx rose 0.7% on Friday night and 3.1% for the week.
In Asia the Shanghai Composite Index closed up 0.5% at 2,874.15, and Hong Kong’s Hang Seng Index ended 1.2% higher at 20,176.70.
There were reports the government intervened in Shanghai late Friday to make sure the market finished higher the day before the 2016 People’s Congress started in Beijing.
Shanghai rose 3.9%, the CSI 300 index of large cap stocks rose 1.3%, but the ChiNext index of smaller companies slumped 5%.
Shares in India rebounded strongly last week, topping the region with a 6.3% surge in the wake of a reasonable budget.
In Australia the ASX200 lifted 0.2% on Friday and gained 4.3% for the week to 5,090 while the All Ordinaries rose 0.2% on Friday and 4.2% for the week to 5,151.1.
All the banks rose strongly over the week: Westpac jumped 11% to $31.71; NAB, 9.1% to $26.63; Commonwealth Bank 7.1% to $75.74; and ANZ Banking Group jumped 10.9% to $25.02.
BHP shares surged 13.3% to $17.67 while Rio Tinto jumped 12.2% $44.90.
The week’s worst performer by far was Slater & Gordon, whose shares plunged 55.4% to 37 cents as investors and analysts questioned the solvency of the embattled law firm.
One of the week’s surprise performers was biotech Mesoblast, which rocketed 45.1% to $2.54.
Shares in WorleyParsons soared 53% to $5.92; AWE shot up 44.7% to 68 cents and Beach Energy shares lifted 36.5% to 71 cents.
