Investors likely to hold off till earnings are in
The US market soared to new heights on Friday, with the broad-based S&P 500 hitting a five-year high and the Nasdaq technology index achieving its best result since 2000.
But CommSec chief economist Craig James said news of China's trade surplus widening by 7.7 per cent in the year to January had already buoyed the Australian market on Friday, ahead of New York trade.
This means the focus on Monday will turn to earnings data due out this week for major listed companies, including Commonwealth Bank, Rio Tinto Wesfarmers and David Jones.
"We've seen pretty good gains for the sharemarket - we want to see the reasons for our rally being validated, not just earnings, but the expectation of companies," Mr James said.
The futures market was expecting the Australian market to open nine points lower, but Mr James said that caution looked overstated as investors looked for company forecasts for the next six to 12 months.
"Perhaps the futures market is a bit negative," he said. "But I think it will be flat rather than down."
The closure of key Asian markets for Chinese New Year this week is also expected to reduce trading volumes.
Australian Bureau of Statistics housing finance data for December is due for release on Monday, but this is not expected to move the market.
During Friday's trade, the Dow Jones Industrial Average reached a post-crisis high above 14,022 points, but slipped back to end 48.92 points, or 0.35 per cent firmer, at 13,992.97.
Hitting a five-year high on Friday, the S&P 500 Index rose 8.54 points, or 0.57 per cent, to 1517.93.
Meanwhile the tech-rich Nasdaq Composite Index touched a 12-year high, jumping 28.74 points, or 0.91 per cent, to 3193.87.
European markets also closed higher on Friday, after EU leaders adopted a seven-year budget for the 27-member union, with London's FTSE 100 Index rising 0.78 per cent to 6276.98 points.
Frequently Asked Questions about this Article…
The market is likely to open flat as investors wait for key company earnings and guidance due this week (including Commonwealth Bank, Rio Tinto, Wesfarmers and David Jones). Futures were modestly negative but CommSec said that caution may be overstated, and recent news such as China's wider trade surplus had already supported markets.
The article highlights upcoming results and guidance from major listed firms including Commonwealth Bank, Rio Tinto, Wesfarmers and David Jones — all of which can move market sentiment when they report.
US markets rose to multi‑year highs (the S&P 500 hit a five‑year high and the Nasdaq reached its best level since 2000), which generally boosts global sentiment, though CommSec noted that China trade news had already buoyed the Australian market ahead of New York trade.
CommSec chief economist Craig James said China's trade surplus widened by 7.7% in the year to January and that news helped lift the Australian sharemarket on Friday before US trading began.
The futures market was signalling about a nine‑point fall, but analysts in the article suggested that signal may be overstated and expected a flat open instead — investors are more likely to react to company earnings and forecasts this week.
The ABS housing finance figures are due for release, but the article says they are not expected to materially move the market on Monday.
With key Asian markets closed for Chinese New Year this week, trading volumes are expected to be lower, which can reduce liquidity and make price moves more muted.
According to the article, investors will be looking not just at reported earnings but at company forecasts and guidance for the next six to 12 months — that forward‑looking information helps validate whether recent sharemarket gains are sustainable.
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