Despite energy stocks falling with Crude and Financials stocks pull back a little the SP500 still managed to push into all-time highs. This time led by the Tech which was up over 1%. Facebook jumped more than 4% after a U.S. federal court dismissed an antitrust case against the company from the Federal Trade Commission.
Locally our market is struggling to follow the US higher this time, it is no surprise considering the uncertainty in NSW with two days in a row with high cases. At this stage, we believe it will be just a drag on the market. We could just hang sideways here until we see the worst of the NSW breakout.
This week is the last week of the financial year. We often see some interesting moves as people do some adjustments to their portfolio and do some tax selling. Next, the focus will be on the up-and-coming reporting seasons, US in mid-July and Australian late July.
Markets will be watching for progress on Biden’s infrastructure bill. We can see progress in the negotiations now so a final decision will not be far off. This will see another round of fiscal stimulus hit the US economy and will also be positive for commodities markets in the long term. The big positive for the market is that once again Biden has abandoned increasing corporate tax rates to get this bill through.
Australian Outlook
Despite further gains in the U.S last night, our market is expected to open lower this morning near 7270. The open should have us test the local support and bottom of the previous consolidation range at roughly 7250. U.S futures sit flat this morning and so we can’t look to them for further leads at this stage.
The market is tracking sideward at the moment. Yesterday’s indecisiveness demonstrated this and today shouldn’t be too different. The recent volatility has all but left, and unless we see strong pullbacks in the U.S, that shouldn’t change.
The sideward movement may be chalked up to a reweighting and cycling of capital. The financials have recently pulled back and the materials have rallied. These two sectors make up more than 50% combined, so if capital moves from one to the other it can keep our market from moving too hard one way or the other. In addition, with the levels markets are trading at, investors are looking for good stocks amongst the many trading at high PEs.
Regardless, if the U.S keeps making grounds our market should eventually go on to make fresh all-time highs.
US Markets
US shares pushed higher overnight, with tech stock leading the push higher. This lead the S&P 500 and NASDAQ indices to record fresh record highs, but outside of tech stocks movements were smaller and more mixed. There was no significant US data overnight and traders and investors had little news to focus on. As mentioned, Technology stocks were the strongest performers overnight, while Communications and Utilities stocks also rose to a notable degree. The weakest stocks were energy stocks, which fell extremely strongly overnight, while Financials and Industrials also closed meaningfully lower.
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