Sharemarkets will be looking to the US tonight for guidance after a weak finish to what was a flat week last week around the world.
The huge $US84.5 billion agreed bid for Time Warner from AT&T was around on Friday night as half a rumour, and had little impact on sentiment.
The AT&T bid is problematic and will be strongly opposed by competitors and by some politicians.
The $US47 billion mop up bid for Reynolds from BAT also didn’t have an impact on investor confidence, but the fact that companies are willing to outlay tens of billions of cash on deals that are designed to eke out improved earnings, but not grow the companies any faster over time, tells that cheap cash covers most sins in investment.
If interest rates were higher, both bids would have been more problematic. Both (like last week’s Tabcorp-Tatts merger in Australia) are highly defensive and therefore nota vote in future growth prospects.
The coming week thoughts will also see earnings to the forefront in the US – so watch for Apple, Twitter and Amazon, plus Alphabet (Google’s owner).
If Apple, Amazon and Alphabet report solid figures, it might be enough to lift the wider market – especially after Microsoft and Netflix released good quarterly reports last week.
Wall Street and European shares were flat on Friday night and reflecting this the ASX 200 futures contract fell just one point, so a weak start to trade on the local market this morning.
But global share markets rose over the past week thanks to generally good economic data, more evidence US earnings have stopped sliding, and confidence that the Fed will be gradual in raising interest rates – and will wait until at least December.
US shares rose 0.4%, Eurozone shares gained 1.6%, Japanese shares rose 1.9% and Chinese shares rose 0.7% but Australian shares dipped 0.1%.
Bond yields generally the oil price rose, but metal prices fell as the $US rose.
While the $A briefly made it above 77 US cents midweek, by the close on Saturday morning, it was just above 75 US cents and looking to ease further.
Last Thursday’s weak jobs report spooked the market (the contents of the report was useless). This week investors are looking to the September quarter inflation report to provide guidance.
Interest rates are not going lower, regardless of what the CPI figure is.
Meanwhile, the Dow and S&P 500 on Friday ended flat and without a lead, while the Nasdaq rallied and all three rose the week.
The Dow slid 16.64 points, or 0.1%, to 18,145.71, but was down more than 100 points at one point during the session.
The S&P 500 index lost 0.18 point to close at 2,141.16, a loss of 0.01%. The Nasdaq Composite Index which is heavily weighted with tech stocks and was supported by Microsoft’s rally, rose 15.57 points, or 0.3%, to close at 5,257.4.
For the week, the Dow rose 0.04%, the S&P gained 0.38% and the Nasdaq picked up 0.83%.
