The ASX is expected to rise today, but it could be a slow start with ASX 200 futures just 4 points higher to 7,605 points this morning.
Last week, the ASX200 finished -0.19% lower at 7,643, as the local earnings season disappointed.
Looking at the sectors, Consumer Staples was down 3.41%, Materials dipped 1.70%, Real Estate lost 1.67% and Energy fell 1.34%. Conversely, IT gained 3.29%, Utilities was 1.86% higher, Consumer Discretionary was up 1.17% and Financial gained 0.94%.
At a stock level, Strike Energy was one of the biggest losers dropping 24.64%, followed by Star Entertainment Group Ltd, Lend Lease and Corporate Travel down 19.64%, 19.57% and 15.41% respectively. In the good books were Appen (+32.31%), CSR (+23.42%), Reliance Worldwide (19.50%), A2Milk (+16.04%) and Bega Cheese (+13.72%).
“The local earnings season enters the home straight this week with reports from companies including Adairs, Endeavour Group, Kogan, Mayne Pharma, Appen, Coles, Woodside, Zip (ASX:ZIP), Harvey Norman, Worley, Ramsay and Life360,” IG Markets Tony Sycamore said.
“Aside from earnings reports, there will be keen interest in Australia’s latest inflation report. The monthly CPI indicator for January is expected to rise by 3.5% YoY, from 3.4% in December. Not enough to derail our expectation of two RBA rate cuts in the second half of 2024.”
What's next for the Australian stock market?
Wealth Within chief analyst Dale Gillham offers insight into what to expect from the market in the coming weeks.
“With BHP (ASX:BHP) Group, Rio and CBA all reporting weak earnings, it's not surprising that the All-ordinaries index has posted a fall of around 0.5% for the week.
"What I find interesting, though, is given the impact BHP, Rio and CBA have on the index given their weighting, a fall of 0.5% is less than I would have expected.
"Given this, the slight pullback is a very bullish sign as it shows that the rest of the market is performing strongly. Therefore, I still anticipate the All-Ordinaries index to break the all-time high in the next week or so.
“Once we break the all-time high, the important question most people will be asking is where to from here. You need to be watching for possible short-term resistance at 8,150 points, with a higher-end target at 8,750 points. The top-end target is a rise of around 10%, and I expect to see that in the coming month before the next significant fall.”
An eye on the US
Sycamore says, “Nvidia's thumping earnings report triggered new record highs on Wall Street and in European and Japanese stock indices. Even the ailing Chinese stock market, the CSI 300 (+3.7%), joined the festivities, gaining 3.7% for the week as easing measures gained traction.
“With the Q4 US earnings season winding down, attention this week returns to growth and inflation data. Fed Speak last week made it clear the Fed views the risks of easing too quickly as outweighing the risks of keeping rates in restrictive territory for too long - which puts the focus squarely on Core PCE inflation on Friday morning.
“Following a hotter PPI print for January, which has a strong feed through into the core PCE, the expectation is for core PCE to rise by 0.4% MoM, for 2.8% annually. This would see the 3-month annualised rate increase from 1.5% to 2.5%, bouncing from the Fed's 2% target. The US rates market is now pricing in just 68bp of rate cuts for 2024 - from 167bp in early January.”
What else happened last week?
(Source: Commsec)
European markets
Closed at a record peak for a second day on Friday. Chemical and automobile stocks were the biggest gainers for the day, rising about 1% each.
Standard Chartered (LON:STAN) jumped 4.9% as the UK lender announced a US$1 billion share buyback and rewarded shareholders with dividends after an 18% rise in 2023 profit.
European Central Bank (ECB) president Christine Lagarde said that relatively benign fourth-quarter wage growth data are encouraging but not yet enough to give the central bank confidence that inflation has been defeated.
- The continent-wide FTSEurofirst 300 index rose by 0.4% to be up 1.2% for the week, its fifth straight week of gains.
- In London, the UK FTSE 100 index gained 0.3% but dipped 0.1% over the week.
Currencies
Were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0837 to US$1.0811 and was near US$1.0820 at the US close.
- The Aussie dollar rose from US65.50 cents to US65.80 cents and was near US65.60 cents at the US close.
- The Japanese yen firmed from 150.76 yen per US dollar to JPY150.29 and was near JPY150.50 at the US close.
Commodities
Global oil prices fell nearly 3% on Friday and posted a weekly decline after a US central bank policymaker indicated interest rate cuts could be delayed by at least two more months.
- The Brent crude price fell by US$2.05 or 2.5% to US$81.62 a barrel.
- The US Nymex crude price slipped US$2.12 or 2.7% to US$76.49 a barrel.
- For the week, Brent declined 2.2% and the Nymex slid 3.4%.
Base metal prices fell on Friday.
- Copper futures slid 0.4% and aluminium futures lost 0.6% after the US unveiled its list of Russian sanctions.
- For the week, copper rose 1.1% but aluminium dropped 2.1%.
- The gold futures price lifted US$18.70 or 0.9% to U$2,049.40 an ounce on Friday.
- Spot gold was trading near US$2,035 an ounce at the US close. Bullion rose 1.2% over the week, buoyed by a softer US dollar and safe-haven demand.
- Iron ore futures shed US97 cents or 0.8% to US$126.85 a tonne on Friday. Iron ore dipped 1.9% over the week amid concerns that Chinese steel demand may disappoint.
What about small caps?
The S&P/ASX Small Ordinaries closed 0.23% higher to 2,945.20. Over the last five trading days, it is down 0.21%.
It has been a steady start on the news front, however you can read about the following and more throughout the day.