Another positive start to a holiday-shortened week is ahead for sharemarkets.
Here the ASX will be looking at a rise of up to 30 points after a solid close for the futures market on Saturday morning.
That was after eurozone shares gained 0.5% on Friday and the US S&P 500 rose 0.4%. Our market was up 0.3%
The positive global lead saw ASX 200 futures rise 29 points or 0.6% pointing to a a solid start to trade for Australian shares later this morning.
The recovery rally was given new legs last week by the US Federal Reserve further delaying interest rate hikes, and slicing the pace of expected rate rises to just two – with investors punting on just one actually, as happened last year.
That has helped change investor views on commodities, markets and data.
So they saw last week’s economic data as being mostly positive in most major economies. A weaker US dollar (except for a bounce on Friday) helped boost commodities and keep the positive attitude alive, especially in oil.
The Aussie dollar ended just over 76 US cents after weekend trading. It had earlier ended at 76.50 in the US on Saturday morning, after touching a new 8 month high in trading of 76.80 cents.
For the week US shares were up 1.4%, Chinese shares surged 5.2% and Australian rose, but some investors are starting to worry about the impact of the stronger Aussie currency on local exporters.
European shares ended flat (despite continuing weakness in the German market) and Japanese shares fell 1.3% as the stronger yen put a dampener on export stocks (which was not supposed to happen under the Bank of Japan).
US shares have now risen 0.3% year to date after being down 10.5% year to date at their most recent lows on February 11.
Australian shares have cut their year to date loss to 2.1% after being down 10% at their February 12 low. A strong performance this week could see our market all square for the year by Easter, but the stronger Aussie dollar could have a negative impact.
The Dow rose 120.81 points, or 0.7%, to 17602.30 on Friday. The S&P 500 added 8.99 points, or 0.4%, to 2049.58, while Nasdaq was up 20.66, or 0.4%, to 4795.65.
For the year so far, the Dow is now up 1%, the S&P 500 has gained 0.3%, but the Nasdaq is off 4.2% as worries about great political oversight of the pharmaceutical sector concern investors.
Drug companies have helped with greedy price rises and flagrant examples of arrogance by some executives when questioned about their price rises. Both Hillary Clinton and Donald Trump have criticised the industry for excessive price rises. Stocks in Europe and Asia have also bounced in recent weeks, but several indexes remain sharply lower for the year.
China’s Shanghai Composite has tumbled nearly 17% (trimmed by last week’s 5% plus gain) and Germany’s DAX has fallen 7.4% so far in 2016 as concerns continue about the stability of the government of Chancellor Angela Merkel.
In commodity markets, US crude oil futures rose 2.4% last week, while gold slipped 0.4%.
