Standby for a solid day on the local stockmarket today.
There’s the French Presidential election and a win for the favourite, Emmanuel Macron, news of a revamp of Australian media laws, a possible bid for Fairfax Media, the bailing out of the Ten network and a sharp 55 point jump in the share futures price overnight Friday.
As well Westpac releases its first half profit this morning and it is expected to follow the ANZ and the NAB in revealing a modest rise in cash profits and a steady dividend.
The cascade of positives for local investors will overwhelm unease about the health of the Chinese economy and iron ore prices, which tumbled sharply last week, losing more than 10% on Thursday and Friday alone.
As well the Federal budget tomorrow won’t hold any fears for investors, but the spate of earnings downgrades in ‘confession’ month could again wear down investor sentiment, as it did last week, along with the plunge in commodities, led by iron ore, gold and oil.
As a result the local market fell 1.5% last week, while Chinese shares lost 1.7%. The Chinese trade data later today will be an early test of obvious fears about the strength of the Chinese economy at the moment.
US shares gained 0.6% to a new record high, European shares jumped 2.9% ahead of yesterday’s Presidential poll in France and Japanese shares gain 1.3% helped by good economic and earnings news, anticipation of the French election result and a weaker Yen.
The fall in commodity prices and especially iron ore hit the $A which dived under 74 US cents, and rebounded back above in overnight trading Friday to finish around 74.25 US cents.
In the US the solid 211,000 rise in April payroll employment and a fall in unemployment to 4.4% (a 10 year low) means the US Federal reserve will lift prices at its June meeting. Its view from last week’s meeting that the weak March quarter growth data was “transitory” was supported by the sold jobs report for last month.
A rebound in oil prices and the jobs report helped the S&P 500 to a new closing high. The benchmark index rose 0.4% to a fresh high of 2,399.27 and was up 0.6% for the week in its third consecutive weekly rise.
The Dow Jones ended the day 0.3% higher at 21,006.94, and the Nasdaq was up 0.4% to 6,100.76. The Dow was up 0.3% for the week, the Nasdaq added 0.9%.
