Strong gains in the oil market and a solid close in US markets should see a positive open to the trading week this morning.
Even by the high volatility standards of recent months, Friday’s rally in oil was noteworthy. Strong buying sees both the West Texas and Brent Oil prices approaching their 200 day moving averages with considerable momentum. This should lead to trader support for energy stocks today.
There was some buying of bank stocks on Friday afternoon. Whether or not this continues may make the difference between whether the ASX 200 index has a day of consolidation or kicks the week off with a robust start. If there is support for banks it will build on the strength in the resource sector.
The rally in the Japanese Yen has got to the stage of being significant for market thinking on the global macro outlook. Yen buying is essentially signalling that further stimulus by the BOJ and ECB will have limited impact. Whether or not they add further stimulus may carry less weight in market thinking on currency markets or economic growth prospects.