The market is expected to open higher this morning, however with economic data figures due later in the week, it may be a short-lived bump.
In fact, time will tell how the market responds to a range of factors this week including a slowdown of COVID cases in the US, rising oil prices due to supply constraints, rising vaccination rates across the US and in Australia and another potential tragedy – a hurricane ripping through New Orleans.
“There’s a hurricane bearing down in the Gulf of Mexico which is causing producers to shut some of their facilities,” CommSec chief economist Craig James said.
“So there’s short term disruption as well as the longer-term expectation that the vaccine is on the way out (of the COVID-19 crisis) and vaccination rates continue to rise across the globe. That improves mobility and, of course, that means rising demand for oil.”
While AMP’s chief economist Shane Oliver says the long-term outlook is good, we could be in for a weak period over the next six weeks.
“Coronavirus remains a threat, Fed tapering is gradually approaching, supply constraints impact growth and the next six weeks is often seasonally weak for shares,” Oliver said.
Let’s see what happens.
Meanwhile, here's what happened on the commodity front:
Oil prices rose more than 11% last week, with Brent crude up to $US72.70
- Iron ore was up 3.7% to $US159.05 a tonne
- Gold was up 0.69%
- Copper was up 1.68%
- Aluminium was up 1.15%
- Tin was up 0.75%
- Nickel was up 1.27%
- Lead was up 0.13%
Australian market
The Australian sharemarket is set to rise on the back of strong performances from energy and mining stocks, which are expected to push higher. A higher start would be an improvement on Friday’s finish, with the ASX flat at 7,488.3, albeit with a gain of 0.3% on the week.
Of the best performing sectors last week, Information Technology and Energy were both are up over 2%. Materials was up over 1%. The worst performing sectors include Consumer Staples and Utilities, down over 2% and Communication Services down over 1%.
The best performers in the ASX/S&P top 100 stocks were Wisetech Global Ltd up over 30%. Qantas Airways (ASX:QAN) Limited up over 18% while Star Entertainment Group Ltd rose over 10%. The worst-performing stocks were Reece Ltd (ASX:REH) down over 16%, Link Administration Holdings Ltd down over 12% and Ansell Limited (ASX:ANN) down over 9%.
Earnings season will finally end, with 15 of the ASX 200 companies reporting in the next two days, including Fortescue Metals Group (ASX:FMG) Limited and Harvey Norman Holdings Limited (ASX:HVN).
With reporting coming to an end, national accounts data due on Wednesday could determine whether Australia is about to fall into a COVID-led recession.
Australian indices
- ASX 200 dropped 0.039% to 7,488.30.
- ASX24 futures rose 0.2% to 7,441.
- S&P/ASX Small Ordinaries fell 0.67% to 3,506.30
- All ordinaries dipped 0.13% to 7,760.10
US market
SPI futures are pointing to a 0.2%, gain at the open after the US markets record highs last week.
Meanwhile, the big news everyone was waiting for last week, was a bit of a let-down.
Federal Reserve chair Jerome Powell provided no timeline on a tapering of asset purchases.
Over the week, the Dow rose by 1%; S&P 500 rose by 1.5%, and the Nasdaq rose by 2.8%.
US indices
- Dow Jones rose 0.7% to 35,455.80
- S&P 500 lifted 0.9% to 4,509.37
- Nasdaq surged 1.2% to 15,129.50
European market
European markets were higher on the back of mining stocks by the close of business on Friday.
Miners were up 1.9% with Rio Tinto rising 1.7% and BHP up 2.2% as a couple of star performers.
European indices
- STOXX 600 rose 0.43% to 472.34
- German Dax was up 0.4% to 15,851.75
- UK FTSE rose 0.3% to 7,148.01
Asian market
Peak Asset’s Niv Dagan tells us China’s shares rose on Friday, after investors took comfort in the central bank’s move to make its biggest weekly cash injection into the banking system since February, and as local authorities urged more financial support for retail and trading firms.
China’s central bank injected 50 billion yuan ($7.71 billion) through seven-day reverse repos into the banking system on Friday for the third straight session. The weekly total injection is a net 120 billion yuan, the largest since the start of February.
Asia indices
- The CSI300 index was up 0.8% at 4,837.90 points
- Shanghai Composite Index gained 0.5% to 3,518.83 points
- The Hang Seng index added 0.5% to 25,546.37 points
- The Hong Kong China Enterprises Index gained 1% to 9,025.53