Australia’s sharemarket is set to rally on Monday after a strong session on Wall Street offset lingering concerns about the outlook for China’s economy.
Futures on the S&P/ASX 200 are up 0.5 per cent, inching the benchmark back up towards its record after a sell-off on Friday. That’s after the S&P 500 notched its 47th all-time high buoyed by robust US earnings. Year to date, that index has jumped 24 per cent.
While equity gains have been more modest in Australia, the ASX 200 is still up more than 8 per cent this year, helping the local bourse reset its record high twice last week to a new peak of 8355.9 points.
“The sharemarket has performed extremely well and one can understand why,” said Stephen Miller, markets strategist at GSFM Funds Management, who cited global rate cuts and a resilient US economy.
“But the little sort of voice in the back of my head is saying that there could be an element of complacency embedded in that price action.”
In commodities, iron ore prices pared some of last week’s heavy losses with futures back above $US100 a tonne in Singapore. The gains may support a rebound in BHP and Rio Tinto which both fell more than 2 per cent last week.
Gold also topped $US2,700 an ounce for the first time as concerns over escalating conflicts in the Middle East and a tight US election race prompt investors to flock to safety.
Energy stocks, meanwhile, may act as a drag after West Texas Intermediate oil tumbled more than 2 per cent on Friday.
Stocks in focus
Vulcan Steel has posted a 13 per cent drop in full-year revenue to $NZ263.1 million ($238.3 million). Earnings before interest depreciation and amortisation slumped 30 per cent to $NZ33.1 million.
The board of Mineral Resources says it has “full confidence” in managing director Chris Ellison and his leadership following an investigation by The Australian Financial Review that he allegedly evaded tax for years. It has engaged external legal counsel to look into the matter and advise the board.
Nick Scali has warned that materially higher freight rates will hit its gross profit margin. In a trading update, the retailer forecast net profit for Australia and New Zealand to be in the range of $30 million to $33 million in the first half.
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