Markets closed higher overnight with all the major US indices closing higher. Share shrugged off some weaker than expected economic reports to focus on yesterday’s Federal Reserve statements, which suggested that dovish monetary policy will remain for a while yet. The strongest performers overnight were Financials and Materials stocks, though nine of the eleven industry groups closed higher.
US GDP overnight came in weaker than expected, though it still showed strong growth. US jobless claims were also worse than expected, adding to the feeling that COVID-19 economic impacts remain. Still, negative economic reports likely mean that we will see continued support from the Federal Reserve in the form of bond buying and low interest rates.
Progress was also made on the infrastructure stimulus bill overnight, with the US senate voting to advance parts of President Biden’s package to congress. This deal is for around $US1trn in funding, which is much smaller than some of the earlier proposals, with President Biden stating ‘neither side got everything they wanted’.
Domestically, it looks like Sydney will see a longer lockdown than originally anticipated, with some suggesting that it could extend all the way in 2022. It remains to be seen whether this will be the case, or whether increasing rates of vaccination will allow an earlier than expected reopening. At present, there doesn’t appear to have been too much impact on market from the recent lockdowns.
Our own market is heading into a reporting season, which will kick off on the 9th of August, expectations are high that our mining stocks will deliver some of the best reports ever. Already we have seen RIO TINTO declare record earnings and dividends, but there are plenty of other miners set to do the same. Reporting from other sectors of our market is expected to be a bit more mixed.
The XJO is expected to open slightly higher following similar leads from the U.S overnight. U.S futures sit flat to red this morning so we have little indication what type of session we may see today.
We are currently consolidating at the top of the range, tracking sideward and using the recent top of the consolidation range as a key support. Markets are trying to digest the recent slew of reporting, economic data and fed statements that have come out in the last 48 hours. It is likely the market doesn’t make its mind up until next week.
US shares closed higher overnight, with the major S&P 500 returning to its all-time high levels from Monday. The index traded above this level at points, but pulled back slightly from its highs to close in-line with Monday’s close. Strong corporate earnings again helped to power US indices higher, though a weaker than expected report from Amazon after market has since sent US futures lower. US economic data overnight was fairly weak as well, with GDP growth coming in strong, but weaker than expected, and with Jobless claims higher than expected. Still, the earnings season has so far been the best of the past decade, and with an accommodative Federal Reserve and US government, prices are continuing to climb. Communications and Real Estate stocks were the only sectors to close lower overnight, while Materials, Financials, and Energy stocks were the strongest performers.
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