According to the overnight futures market at the weekend, our market isn’t going anywhere today.
The futures trading saw a three point gain for the ASX 200 which is hardly a confidence booster.
So investors will be looking to trading in Asia later today for any leads.
Last week US and European shares rose 0.3%, Japanese shares rose 2% helped by a fall in the yen, Chinese shares inched up 0.1% and Australian shares rose 0.4% led by health and energy shares.
In fact, for the year to date the Australian share market is up 1% and according to the AMP’s chief economist, Dr Shane Oliver, “is outperforming US, European, Japanese and Chinese shares”, which is something not fully appreciated by local investors.
Bond yields generally rose (in Australia they bounced off all time lows around 2.22% for the 10 year bond hit on Tuesday) as investors moved to factor in a higher probability of a Fed rate rise next month, or in July. This also saw the $US push rise.
The stronger $US weighed on the $A and metal prices which fell, led by gold for its second losing week in a row. But worries about production disruptions helped the oil price gain 3%.
On Friday eurozone shares had a strong day, rising 1.4% and on Wall Street S&P 500 rose 0.6% as nervousness thanks to a solid rebound from tech stocks.
Dr Oliver wrote at the weekend that we should expect “short term share market volatility to remain high.”
“Fed worries are coming back into focus and this could mean more uncertainty around the $US, Renminbi and commodity prices and the old saying “sell in May and go away, come back on St Leger’s Day’’ always adds to nervousness around this time of year.
"However, beyond near term volatility, we still see shares trending higher this year helped by a combination of relatively attractive valuations, further global monetary easing and continuing moderate global economic growth,”Dr Oliver said.
Bank shares on Wall Street were among the biggest beneficiaries of Fed’s talking up a possible rate rise, with the S&P 500 banks index jumping more than 3% over the week.
At the same time, the yield on the benchmark 10-year Treasury bond, the key global indicator, rose 14.4 basis points on the week to end at 1.84% – the biggest rise since November last year.
Utilities shares which have rallied heavily this year on expectations of one or perhaps no rate rises, fell more than 2% last week and will come under continued pressure the closer we get to the June, and then the July Fed meetings.
US stocks closed higher on Friday with the S&P 500 and the Nasdaq posting weekly gains, but the Dow extended its losing streak for a fourth week.
The S&P 500 index added 12.28 points, or 0.6%, to close at 2,052.32. That ended a three-week losing streak and pushed the index up 0.3% for the week.
The Dow added 65.54 points, or 0.4%, to finish at 17,500.94 but the index fell for a fourth week, off 0.2%.
But the Nasdaq Composite jumped 57.03 points, or 1.2%, to close at 4,769.56. The index came off fourth straight weeks of losses for a weekly gain of 1.1%.
And the ASX 200 rose 0.5% on Friday and 0.4% for the week to close at 5351.3. The All Ordinaries lifted 0.5% on Friday and 0.3% over the week to close at 5415.2.
