US markets continued to rally this time hitting another record high. All sectors closed in the green except materials. Financials were the standout as Oil keeps rallying and the Yield curve continues to steepen. Gold fell off but other metals held or pushed higher. Iron Ore also recovered some of the sell down from last week.
Locally the talk of the town is the RBA which has given investors renewed confidence that the House market and Equities markets have plenty more upside. We are seeing headlines like “RBA to set off raging bull markets” on the AFR. This was sparked by the RBA announcement on Tuesday where they indicated rates will stay low until 2024 and that rates will not increase until inflation reaches the 2-3% target sustainably.
Once again, in the long to medium term, it is all about stimulus, markets are likely to hold or rise as long as there is more cheap money. This will continue to help sentiment towards equities and therefore further upward movement is on the table.
With a strong move higher in the U.S overnight, our market is expected to reverse yesterday’s losses on open. This will put us back towards the key resistance near 6850. For us to push through it is likely we still need permission to do so, and considering it is Friday our market may be reluctant without excessively strong futures from the U.S.
Attention locally has shifted back to the RBA minutes released Tuesday, with investors waking up to the strong bullish environment the RBA has signaled to over the next few years. In the medium term our market should experience a good push higher, but in the shorter term we will need to see the break of 6850.
US shares rallied to records overnight, with shares buoyed by strong economic data. US Jobless claims, factory orders , and labour costs were all better than expected, adding to optimism around an economic recovery. Jobless claims in particular fell to their lowest number since November, foreshadowing a potentially strong unemployment read tonight.
Financials stocks were the strongest movers overnight, rising around two percent on average, liked due to longer term bond yields rising. Every other major sector closed higher except for basic materials, which ticked slightly lower.