For the first time in 2016 share markets and oil prices moved independently in overnight trading. Weaker manufacturing data in China and the US further undermined confidence in the growth outlook, leading oil traders to dump longs. Despite these negatives, and strong rallies on Friday, US markets recovered early losses to finish flat to slightly higher.
An important factor in the late gains was stronger reporting into the close. Sysco, insurer Aetna and coffee roaster Kuerig Green Mountain all reported strongly during the session, and after-market the iconic Alphabet (nee Google) delivered 7% above expectations. As US reporting approaches the half way mark the overall fall in earnings growth is around 4%, running around 3% better than forecast. Many analysts expected weaker growth on the back of a resurgent USD, and any concerns about broader economic impacts are offset by the ongoing strength in job creation.
Australian company reporting gets going this week, with Downer EDI, Tabcorp, NewsCorp, REA Group and Whitehaven Coal all communicating with investors on Thursday and Friday. Futures markets are indicating an opening down a single index point. However, the 6% plus falls in oil overnight may contain any investor enthusiasm, and the response to the divergence from oil prices combined with the corporate news to come may see investors sitting on their hands today.