Banks, Energy, Industrials, and Materials are getting a lot of attention as investors continue to buy stocks that will likely outperform as the COVID recovery sets in. With almost 10% of the population having their first Vaccine shot and almost 3% fully Vaccinated there is light at the end of the tunnel in getting the Virus under control in the US.
Oil and many base metals rallied continued to rally, alongside Bitcoin as Tesla buys in big and is going to also use the Crypto Currency as a payment method.
Bidens 1.9 trillion stimulus is on track, but minimum wage increase is likely to be axed. Many are expecting another round of checks to be approved by March and Covid relief which expires in March could be pushed out to September.
The rally in the US 10-year yields seems to have finished for now after rising from 1.00 to 1.17%. When bond yields go up it means people are selling out of bonds. The fact the stock market is buying up and the yields are also climbing says to me we are seeing a switch out of bonds into Equities.
The momentum in the US is still strong, so it is strange to see the Australian futures down today. The banks may take a breather into CBA’s report tomorrow, Energy and Materials should be up today considering Iron Ore, Energy, and Base metals pushing higher.
Despite gains overseas our market is expected to edge lower on open. It seems we are set to test the previous post-fall high at 6850, now as a support, before continuing higher. With the U.S making fresh all-time highs, and their futures sitting slightly in the green, don’t be surprised if we finish the day the higher. A strong rally in the AUD is likely offsetting some of the expected gains.
We are now deep into reporting, with many big-name companies releasing their earnings and forward guidance this week. Notably, we have SUN, MQG, JHX,CPU, MQG, CBA, ASX, AGL, IAG, CIM, TLS, TCL, NCM, AMP, CSL. All of these stocks are Optionable and should be considered for strangles. Make sure you double check the reporting date on the company website.
US shares rose again overnight, with strong US vaccination numbers and statements from Democrats that they are committed to passing the $1.9 trn stimulus bill. It was the sixth day of gains in a row for the S&P 500 index, and the third successive all-time high.
While prices have become somewhat elevated for US shares, the conditions that have caused them to rally to records remain in place. Oil & Gas were the strongest performing stocks overnight, while basic materials stocks also rose strongly. Telecoms and Utilities stocks were the only sectors to close lower.