The ASX is set for a solid opening on Monday morning following a 46-point gain in share price index futures trading on Friday night. However, this gain may be tempered by the unknown reaction to yet another lackluster stimulus announcement from the Chinese government on Saturday.
This announcement marked the third stimulus in three weeks, and once again, it was long on talk and very short on actual dollar or yuan values.
Investors are left guessing about the overall size of the stimulus package—a vital detail for assessing the longevity of the recent stock market rally, which came to a halt on Friday as mainland markets fell more than 2% ahead of the statement.
How the markets start the week today will provide insight into the effectiveness of the latest announcement, as will iron ore prices in Singapore, which have proven to be a good indicator of investor and business confidence in the strength of the Chinese stimulus narrative.
Iron ore prices rose slightly on Friday, ending the week at $105.95 per tonne, down from the previous week’s $110.95—a small setback following the second stimulus announcement last Tuesday, which failed to sustain market gains.
Comex gold futures edged up by a tiny 0.04%, closing at $2,674 per ounce, while Comex copper fell by 1.6%, ending at $4.49 per pound.
US West Texas Intermediate crude closed at $74.49 per barrel, up 1.4% for the week, while Brent futures managed only a 0.8% gain for the week, ending at $78.79 per barrel.
US markets will trade tonight despite being a public holiday, although bond markets will be closed, leaving investors to focus on the Nasdaq and the NYSE.
The ASX 200 added 0.8% last week, with the share price index up 46 points at the close of futures trading early Saturday, Sydney time.
Wall Street indexes surged to record highs on Friday as investors welcomed strong earnings reports from banks and a benign inflation reading.
The Dow and S&P 500 gained 1% and 0.6%, respectively, both hitting all-time closing highs, while the Nasdaq Composite added 0.3%.
The S&P 500 rose 1.1% last week, the Nasdaq was also up 1.1%, and the Dow gained 1.2%.
The major indexes have recorded weekly gains for five consecutive weeks, bolstered by optimism about the outlook for the US economy and corporate earnings following better-than-expected quarterly results from JPMorgan Chase and Wells Fargo on Friday. Goldman Sachs, Citi, Morgan Stanley, and Bank of America are due to report this week.
In addition to the banks, the coming week will see quarterly reports from UnitedHealth Group, Johnson & Johnson, Abbott Laboratories, Netflix, Procter & Gamble, and American Express.
The US economic calendar includes September import prices, retail sales, industrial production, capacity utilization, housing starts, and building permits.
The Australian reporting calendar is sparse, featuring just the Bank of Queensland on Wednesday, which is expected to report a statutory loss for the full year.
Jobs data for September will be released on Thursday.
China will release GDP, inflation, and trade data for the September quarter and the month of September.
Additionally, the European Central Bank is likely to cut rates again on Thursday.
