Overnight the US markets stalled again near the all-time high as investors await aftermarket reporting. Google is up 5% in after-market trading following a strong report, Visa is up 1.1%, AMD up 3.87%, Starbucks down 1.76%, and Microsoft down 2.57%. This will be another large week of reporting which so far, around 84% are beating expectations at this stage.
We also have the FED announcing Thursday night, things have calmed down around the Bond markets, after the last few months, where we saw volatility around the uncertainty of inflation. We expect the FED to not change anything this month we are yet to see inflation rise above expectations.
What the US markets do next will depend on the rest of the reporting season, and how Biden’s $2 trillion infrastructure bill plays out.
April so far has been a strong month with the S&P500 moving up around 8% since late March. The XJO has gained 5%. The typical seasonal pattern for the markets is a rise into May and then ‘Sell in May and Go Away’. This means more times than not May is a bearish month. A correction in May is also common to see, especially if we see a strong move up into the pullback. Timing is always key it could come earlier or later watch the 4,116 levels on the S&P500.
Materials stocks have come back to life, with more upside potential as Metals and Iron Ore continue to push further into multi-year highs. Iron Ore is almost hitting US$200 a tonne and Copper almost testing the all-time high set in 2011. The Materials index in Australia is also nearing the pre-GFC all-time high and will likely break that level today.
The XJO is expected to open fairly flat this morning following similar leads from the U.S overnight. U.S futures though have pushed modestly into the red. If they remain so during our session today, it would be hard to expect any gains and in fact it would more likely lead to a pull back.
If we do see another retracement today, 7000 should once again prove to be a support that help keeps the market buoyed against weak retracements. If harsher selling occurs then 6950 is the next key line of defence.
We are nearing May, which cyclically can spell large pullbacks and corrections following a bull run from U.S reporting. The market never repeats, but it rhymes so investors are likely to be cautious once we get into the meat of May. Before that though, it is reasonable to expect one last leg up. U.S markets are nearing trend, and positive sentiment remains from the world’s largest economy. Locally, we are a stone’s throw away from 7200 – our all-time high, and its likely to be in many market participants minds.
US shares closed flat again overnight, with the S&P 500 index trading both higher and lower at points. It was a fairly unremarkable US session, with the market being steadied by a strong consumer confidence read, with the sentiment gauge moving to a 14-month high. Earnings movements were mixed, with Microsoft falling in aftermarket trading despite a fairly strong report, while Google parent Alphabet rose strongly after market after reporting strong advertising numbers. US government bond yields pushed higher overnight ahead of a Fed meeting tomorrow, with no change to official interest rates expected; investors will instead be looking at the commentary on yields, bond buying, and inflation. The majority of SP500 sectors closed lower, with Utilities faring the worst. Energy stocks were the strongest performers overnight, followed by Financials and Industrials.