A solid earnings season and rising confidence in the Fed’s rates policy saw markets continue their advance to start the week well into positive territory.
An announcement from Hamas that it accepted an Egyptian-Qatari cease-fire proposal to end the war with Israel also gave stocks a boost in early afternoon trading.
The Dow Jones rose 0.46 per cent to post its fourth consecutive winning session. The S&P 500 closed 1.03 per cent higher and the Nasdaq finished 1.19 per cent higher for the day.
While the peak of the first-quarter earnings season has passed, investors are still watching key companies set to report this week, including Dow member Disney on Tuesday and Uber on Wednesday. On Saturday, Warren Buffett’s Berkshire Hathaway reported a nearly 40 per cent surge in year-over-year operating earnings for the first quarter. Berkshire also held its annual shareholders meeting.
Apple fell on the day bucking the magnificent trend after Warren Buffett revealed he has cut At the Berkshire Hathaway AGM, Buffett told shareholders that unless something changes dramatically, Apple will remain its largest investment, hinting that tax implications had motivated the sale.
Small-cap names outperformed on Monday with the small-cap focused Russell 2000 rising 1.3 per cent in afternoon trading.
Corporates are increasingly exiting their buyback blackout periods, with a surge in buyback announcements observed, totalling over $130B in the S&P 500 last week, bringing the Q1 earnings season total to $262B. Of that $262B, Apple and Google make up $180B, whilst other companies have contributed significantly, with announcements totaling a solid $82B, reflecting a persistent trend where buybacks remain subdued.
In addition, retail investors chased higher yields in April, driving significant inflows into highly leveraged US exchange traded funds amidst market volatility and uncertainty over interest rates, totalling around $5.2bn in the top 22 leveraged ETFs by the end of April, according to VandaTrack data. This surge contrasts with Q1 outflows from passive funds amid record S&P 500 highs, but escalating Middle East tensions and US interest rate uncertainty prompted investors to turn to leveraged ETFs for market speculation or hedging.
In commodities news, iron ore rose 2 per cent in Singapore, nearing $US120 a tonne. In New York, gold gained 1 per cent and oil edged higher.
Overall, all US sectors closed higher overnight. Tech was the best performer. Real Estate was the worst.
Turning to domestic markets, all eyes will be on first quarter retail sales at 11.30am followed by the critical RBA policy statement at 2.30pm.
Futures
The SPI futures are pointing to a 0.5 per cent gain.
Currency
One Australian dollar at 7.30am was buying 66.23 US cents.
Commodities
Gold added 0.98 per cent. Silver gained 3.46 per cent. Copper rose 1.27 per cent. Oil was up 0.47 per cent.
Figures around the globe
European markets closed higher. London’s FTSE was closed, Frankfurt gained 0.96 per cent, and Paris closed 0.49 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng added 0.55 per cent while China’s Shanghai Composite closed 1.16 per cent higher..
The Australian share market closed 0.70 per cent higher at 7,682.37.
Ex-dividends
National Aust. Bank (ASX:NAB) is paying 84 cents fully franked
Dividends payable
Duratec Ltd (ASX:DUR)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
