Overnight, the US markets jumped strongly higher, with positive retail sales, industrial production, and jobless data helping to power US shares higher. US company earnings reporting was also extremely positive and just about every large company that reported beat their earnings expectations. The data overnight highlighted the extreme strength of the US economic recovery.
The strong reporting overnight came from a range of different sectors and companies and served to highlight that it is a broad-based recovery, with plenty of industries enjoying some strength. Tomorrow we will see more banks report earnings, while next week will have more companies focused on consumer goods.
Locally some of our banks report early May and most Miners and Energy stocks will have quarterly production reporting this month. Expectations are strong for our own domestic reporting, with continued recovery expected here as well.
Today we will see some Chinese economic data, which will likely have relevance for commodities prices and the Australian dollar. The most important data point today will be Chinese GDP (with growth of 1.5% expected for the quarter), but we will also see Chinese unemployment, retail sales, and industrial production.
The XJO is expected to edge higher on open this morning following a strong night in U.S markets where fresh all-time highs were made once again. The rally expected this morning, though meek at this stage, helps solidify our move past the 7000 level. A break of the recent consolidation should hopefully lead to further bullish movement with 7200 (our all-time highs) in the cross hairs. We will likely need the U.S to continue making gains for us to have permission to get there though.
Though we expect markets to continue higher, it is certainly reasonable to expect breathers and retracements – as the saying goes, “the market takes the stairs on the way up.” We recently consolidated, a hallmark move for our market after a run, but we have yet to see a real retracement. When we do, we can look to 7000, then 6950, and then 6850 to help keep us elevated. Otherwise, come May, if cyclicals play out, we may see a correction or an extended pull back.
US shares jumped strongly higher again overnight, with fresh highs being reached across the major US indices. The Dow Jones index cleared the 34,000 point milestone for the first time ever overnight. Shares were powered higher by strong economic and company reporting data, with US retail sales enjoying extremely strong growth through the month of March. We also saw Jobless claims come in lower than expected, with manufacturing data also looking positive.
On the earnings reporting front, earnings from all the major names overnight came in better than expected. All of the information that came out overnight fed into the story that the US economy is running hot at the moment, with strong growth expected to continue. Given that this is the case, and that monetary and fiscal conditions remain accommodative, we would expect the strong price movements to continue. Just about every major sector division except for Oil & Gas rose overnight, with technology, healthcare, and materials stocks the strongest performers.