Following a record night on Wall Street, Australian shares will start higher later this morning after ASX 20 futures trading rose 0.6% or 26 points (at 7am).
The Australian dollar eased to 75.35 US cents, US gold futures rose, but oil sold off after a surprise rise in OPEC production last month.
Iron ore prices were up 0.9% to $US55.68 a tonne.
In the wake of the sharp rebound in Tokyo yesterday after Prime Minster Abe’s clean sweep in Upper House elections, and then another round of rises across European markets, Wall Street started confidently and continued in the same vein all session.
The S&P 500 hit an intraday record of 2,141.30 and closed at a record 2,137.16, surpassing its previous all-time high of 2,130.82 set on May 21, 2015.
The Dow ended at its highest level in 13 months, closing up 0.4% at 18,226.93, and within 86 points of its best-ever close reached on May 19. 2015.
And the Nasdaq Composite briefly traded at 5,000, before finishing up 0.6% Monday at 4,988.64. Alcoa shares rose by close to 4% in after hours trading following a better than forecast second quarter report. The company beat Wall Street expectations in both earnings and revenue.
Alcoa’s report started the second-quarter earnings season with the highlights to be a trio of big banks – JPMorgan Chase, Wells Fargo and Citigroup.
As to why the markets went for a big run overnight was the stunning 4% jump on the Tokyo Exchange after the Upper House elections on Sunday saw Prime Minister Abe within reach of a supermajority in the Senate that could see him make significant changes to Japanese politics and economic management.
Japanese investors ignored a sharp fall in machine orders to a 14 month low. They see the election result was meaning more stimulus from the government and the Bank of Japan. The path of trading on Asian markets today will be determined by the way Tokyo trades after it opens in the late morning, Australian time.
There will be an early boost from the solid performance on Wall Street.
The S&P 500 has rebounded by about 7% since the Brexit-driven lows in late June last month as a stream of data have suggested the US economy is faring better than it appeared just a few weeks ago. In particular, the surprisingly strong June jobs report released on Friday has helped to lift sentiment.
At the same time, investors are still expecting the Federal Reserve to increase interest rates very slowly, which has seen stocks and bonds rally together.
