In a reversal of the themes that plagued Australian shares over the first quarter, all indicators are flashing green for the local share market today. Metals and oil prices are up, global banks are rallying as US reports point to stronger than forecast balance sheets, and the AUD is threatening higher levels and encouraging international buyers.
Energy prices are dominating market thinking. Despite disappointment in Doha oil prices are firmer after an initial sell-off yesterday, as traders contemplate non-OPEC supply cuts and a better global demand scenario. This positive outlook is spreading across both commodity and stock industrial exposures. While there are no forecasts of economic boom, market sentiment had become wildly negative, and current rallies appear to characterise diminishing pessimism rather than rising optimism.
US company reporting continues to outperform, led by the industrial and consumer sectors. Lower oil prices are filtering through to corporate and household bottom lines, lifting confidence and activity. The low bar set for corporate USA for the current quarterly report sets investors for potential further gains if very bearish forecasts are beaten.