Commodity prices such as iron ore, oil and copper surged on Friday night for varying reasons, so will Australian investors pick up on the scent later this morning, or will they follow the safety of the 0.2%, or 10 point rise in the SPI overnight Friday?
That was after the ASX 200 Index rose 1% on Friday to 5720.6, for a weekly gain of 1.8%, the best for two months.
Judging by the commodity price surge on Friday night (and for much of last week, copper was up nearly 6% for example), local investors will be well placed to push the market higher than the small gain on the SPI, especially if iron ore futures in Asia are again strong later today.
But they will also have to contend with the stepped up Australian corporate reporting season with the likes of JB Hi-Fi out earlier today and an early market indicator, especially for its outlook for 2017.
A series of solid reports and outlooks could trigger a surge in activity by hitherto cautious investors.
Iron ore futures in China topped the $US100 a tonne level for the first time since late 2014. Prices were also up sharply on the Singapore futures market.
And spot ore with 62% iron content (the standard Australian ore type) in Qingdao in northern China jumped 3.3% to $US86.62 a tonne on Friday, the highest since September 2014, according to Metal Bulletin.
That saw BHP Billiton shares up more than 2% in London and Rio Tinto shares up more than 5.6%. That was after gains of 1.8% and 1% on the ASX earlier on Friday. Fortescue shares were up 1.8% as well in Australia.
Data for January on Friday showed that China imported 92 million tonnes of iron ore in last month, compared with a year ago. That was the third highest in record and came despite stocks of ore held by Chinese mills hitting a record 123 million tonnes.
It was also well up on the 89 million tonnes imported in December and just under the all time high of 96.26 million tonnes imported in December 2015.
The commodity price rise had no impact on other markets on Friday night. Eurozone shares were flat on Friday while the US S&P 500 rose 0.4% to a new record high.
But most major share markets rose last week helped by a combination of good economic data and profit news, announcements from President Trump progressing his deregulation and tax reform agenda, and rising commodities such as oil.
US shares rose 0.8%, Japanese shares rose 2.4%, Chinese shares gained 1.5% and Australian shares rose that solid 1.8%. Eurozone shares though slipped 0.1%.
The $A rose slightly to 76.74 US cents, despite that stronger iron ore price and rises in other commodities.
Friday’s record close on Wall Street come a day after all three main indexes closed at all-time highs, after Trump promised to announce a “phenomenal” tax policy in a few weeks.
The S&P 500 index rose 8.23 points, or 0.4% to 2,316.10 – a second straight record finish. Higher oil prices lifted materials, energy and industrials shares, which pushed the market higher.
The Dow Jones Industrial Average added 96.97 points, or 0.5% to 20,269.37.
The Nasdaq Composite Index rose 18.96 points, or 0.3%, to 5,734.13. The S&P 500 advanced 0.8% last week, the Nasdaq Composite added 1.2%, the Dow was up 1%.
