It seems the risk-on attitude has not gone away. Bond yields continued to climb as we see investors sell out of bonds. The flow of money seems to be coming back into the recovery space. We are seeing the likes of Oil continue to rally, alongside other metals like Copper and Aluminium. US markets also pushed higher but will be closed tonight for Presidents day. Energy and Material stocks led the charge higher on Friday.
Locally Friday we saw the Australian market sell-off as Victoria went back into lockdown. The move down will likely be recovered today. Materials and Banks stocks should like the current environment. Banks will benefit from the steepening yield curve. Whilst the miners should get a kick up with Base metals. Iron Ore is closed with China New Year’s but closed near yearly highs.
The move back into recovery stocks and Value stocks continues. Investors will be focused on the economy recovering as we see Vaccines roll out. Central banks are likely to remain accommodative for a long time and more fiscal stimulus from the US is on its way.
The XJO is expected to move higher on open this morning. Futures mark us around 6850, which virtually recovers the losses experienced Friday. Friday’s fall could be attributed to negative U.S futures during that session, but also VIC going into snap lockdown. It seems the negative local news isn’t enough to keep us down though in the face of U.S markets pushing into fresh all-time highs. U.S futures sit mildly in the green this morning, so hopefully we can maintain the gains through our session today.
The open will put us back into the territory of testing the post-fall highs of roughly 6900. Whether we get through this level will likely be decided on a later date, especially considering the U.S is on holiday tonight. Whether we get through in the short term is murky, but broadly speaking, things remain bullish.
The U.S is feeling more certainty in stimulus, Fed support, but also a recovering economy. They essentially get to have their cake and eat it to – it’s no surprise therefore, that they keep pushing into new territory, and as they do, we should follow suit.
Locally we have our own reporting season moving along, and we have the worrying idea (spread through rumours and conjecture) that VIC could remain in lockdown for longer than five days. VIC’s government has shown a tough approach to the virus with lockdown’s being its preferred ammunition so it would not be surprising to see an extended lockdown if cases continue the same trajectory.
This week we have another slew of reporting – check TradersCircle’s reporting calendar to find out who is reporting and when. Some notable stocks this week include: Today BEN; Tomorrow ANN, BXB, BHP, NAB (Qtrly), SGM; Wednesday CAR, COL, RIO, TAH, WBC (Qrtly), TWE; Thursday CCL, CWN, CSL, FMG, ORG, OZL, SHL, S32, SGR, STO, WPL, WES; Friday GMG, ING, QBE.
US shares rose again on Friday, with all of the major US indices again closing at all-time highs. Optimism around the vaccine rollout, as well as the expected $1.9trn stimulus from the Biden administration are helping to keep spirits high in US equity markets.
The Democrats are hoping to have their stimulus package passed by the end of March, so we should see frequent updates from this front in the coming weeks. Oil and Gas stocks were the strongest performers in the US on Friday, while every sector other than Telecoms and Utilities also closed higher.