The ASX 200 is poised to open higher this morning as it looks to test record highs — ASX SPI futures were trading 0.1% higher at 7,607 at 9am AEDT.
Last week, the benchmark index finished just 0.5% below its record high achieved on February 2 after finishing up 0.2% for the week.
In the US, the S&P 500 closed down 0.5% on Friday — falling from a record high — after the producer price index showed an uptick in prices due to a jump in the cost of services.
Reporting season continues
With more than 80 major listed companies scheduled to report earnings over the next five days, whether the market moves to new highs will largely depend on their profit results.
Majors reporting this week include Woolworths and Qantas, along with iron ore majors BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) Metals, and property developers including Lendlease and Stockland.
The earnings season has, so far, been surprisingly strong — both in Australia and the US.
Around one-third of the largest companies on the ASX have reported December half-year results. Of these, 47% have had results come in better than expected, while 34% have missed market expectations.
In the US, almost 70% of S&P 500 companies have reported results, with 81% beating expectations.
AMP head of investment strategy Shane Oliver said: “It’s early days in the Australian reporting season … but so far, so good with results generally coming in better than expected.
“Expectations remain for a 5% or so fall in profits this financial year, with a big fall in energy sector profits on the back of lower [commodity] prices.”
What happened overseas?
Here’s what we saw (source CommSec):
US markets
US sharemarkets fell on Friday after a hotter-than-expected US producer prices report eroded hopes for imminent interest rate cuts by the US Federal Reserve.
- The Dow Jones index fell by 145 points or 0.4%, the S&P 500 index lost 0.5% and the Nasdaq index shed 130.5 points or 0.8%.
- The Dow ended the week lower by 0.1%, while the S&P 500 slipped 0.4% and the Nasdaq tumbled 1.3%, breaking their five-week winning streak.
US Treasury yields spiked after core producer prices rose the most since July 2023. In response, traders added to bets that the Fed may defer the first rate cut until after June.
- Rate-sensitive technology stocks underperformed with Meta Platforms and Apple (NASDAQ:AAPL) down between 0.8% and 2.2%.
- Nike (NYSE:NKE) fell 2.4% after the sneaker giant said it was laying off 2% of its workforce as part of a broader restructuring.
- Digital Realty Trust slid 8.3% after the data centre real estate investment trust's full-year forecast disappointed.
US government bond yields rose on Friday after US economic data showed producer prices increased more than expected in January, ratcheting down market expectations for the timing of a rate cut from the US central bank this year.
Comments from Atlanta Fed president Raphael Bostic and San Francisco Fed president Mary Daly indicated the central bank was ready to remain patient before deciding to cut rates this year.
The US 10-year Treasury yield rose by 5 points to 4.29%. And the US 2-year Treasury yield lifted 8 points to 4.65%. The 10-year yield rose 11 points with the 2-year yield up 16 points over the week.
European markets
European sharemarkets ended higher on Friday, hitting a fresh two-year high, led by mining stocks which jumped 2.4%. German and French stocks extended gains to hit another record high. British retail sales rose by 3.4% in January (survey: +1.5%), the biggest increase since April 2021.
- The continent-wide FTSEurofirst 300 index gained 0.7% and was up 1.4% over the week.
- In London, the UK FTSE 100 index climbed 1.5%, the most in four months, posting a weekly gain of 1.8%.
Currencies
Currencies were stronger against the US dollar in European and US trade.
- The Euro rose from US$1.0732 to US$1.0786 and was near US$1.0775 at the US close.
- The Aussie dollar lifted from US64.98 cents to US65.44 cents and was near US65.30 cents at the US close.
- The Japanese yen firmed from 150.63 yen per US dollar to JPY150.09 and was near JPY150.20 at the US close.
Commodities
Global oil prices rose on Friday, closing at the highest settling price this year, on supply worries due to increasing tensions in the Middle East.
- The Brent crude price rose by US61 cents or 0.7% to US$83.47 a barrel.
- The US Nymex crude price gained US$1.16 or 1.5% to US$79.19 a barrel.
- For the week, Brent gained 1.6% and the US Nymex rose 3.1%.
Base metal prices were mixed on Friday.
- Copper futures jumped 2.2% to be up 4.1% on the week, the most in eleven months, helped by falling inventories.
- Aluminium futures lost 0.5% and were down 0.3% for the week.
Gold price:
The gold futures price rose by US$9.20 or 0.5% to U$2,024.10 an ounce on Friday.
- Spot gold was trading near US$2,013 an ounce at the US close.
- Bullion fell by 0.7% over the week.
Iron ore futures lifted US12 cents or 0.1% to US$129.29 a tonne, up 0.4% over the week.
What’s on today?
In Australian company news, a2 Milk, Ampol, Bendigo & Adelaide Bank, BlueScope Steel (ASX:BSL), Cochlear, GPT, GWA, Lendlease, Reliance Worldwide and oOh!media release earnings. Westpac issues a trading update.
US financial markets are closed in observance of President's Day.
On the small cap front
The S&P ASX Small Ordinaries finished 0.16% higher on Friday, while the ASX 200 gained 0.69%.
You can read more about the following throughout the day.
- Brookside Energy Ltd (ASX:BRK, OTC:RDFEF) has provided an update on operations from the multi-well Flames-Maroons Development Plan (FMDP) in the core of the southern SCOOP Play in the Anadarko Basin.
- Cyprium Metals Ltd (ASX:CYM, OTC:CYPMF) has accepted the resignation of managing director Clive Donner.
- Strickland Metals Ltd (ASX:STK) has identified a new primary mineralised structure at the Dusk til Dawn target at the Yandal Gold Project, which has potential to add significant ounces to the existing mineral resource base.