Strong markets to support Australian shares

Overnight, traders and investors read weak European data as further confirmation of ECB stimulus, driving continental shares higher. Similarly, US markets ignored anaemic retail sales to send markets higher on good corporate reports. Throw in a rally in oil and copper, and Australian shares are set to recoup yesterday’s lost ground.

Sentiment was boosted by news of IMF funding for the Ukraine, and conciliatory statements from Greek and German policymakers. A smooth passage for the re-financing of Greek debt that matures at the end of the month would remove a key global market risk. Optimism is rising that a deal will be reached, despite reports of Athens knocking back a proposal agreed by its own Finance Minister. Grexit negotiations are set to dominate market moves next week.

Locally, analysts receive a brief reprieve from this week’s avalanche of company reports. This morning Sims Metal and Automotive Holdings have beaten estimates. Newcrest Mining is the only other top 200 report today. The sugar hit of lower rates combined with solid reporting from majors such as CBA and Telstra this week should see shares firmly in positive territory today.