A big week for markets and our super funds got huge overnight, when fund manager Charlie Aitken reminded me on last night’s Switzer TV program that over 40% of the S&P 500 index reports this week!
That means around 200 of the best companies in the biggest economy of the world will do their show-and-tell this week. And this is on top of interest rate decisions by both the US and Japanese central banks.
These could be market makers or stock price rockers in their own right. However, if you throw in not only the recent revenue and profit performances of many of America’s best businesses but also see their outlook statements, it makes it all very impactful on Wall Street and then other stock markets.
Overnight, the market consensus is that the Fed won’t raise interest rates this week, which helps stocks and there are many now arguing that a June hike is even becoming less likely! Some think the next rate rise will be in September, when hopefully signs of a stronger US economy will be more evident. By the way, the US gets its latest economic growth number this week and this also could be another market mover.
The good news is that the Dow Jones index struggled into the black, with oil prices higher and the greenback lower, which means our dollar is up to 77.42 US cents. That could be OK news for our stock market today and stocks such as BHP, Rio and energy shares.
That’s great but this is all day-to-day stuff. The big question remains: what happens to the stock market in coming months and over the rest of the year?
Fund manager Geoff Wilson told me last night that his dear old dad told him to “sell in May and go away”. And while his stock buying strategies are more sophisticated than that, he thinks there’s something in it for this year. He says he can’t see enough good value stocks to justify optimism.
Charlie Aitken is less negative but underlines the importance of the company reports out of the US this week. And then we get local bank trading updates next week, which could be critically important for our market.
Market jitters this week makes total sense, with the Dow closing in on its all-time high and our market up around 11% since 10 February. If you were a short-term trader and bought BHP at $15 and you saw $20 recently, why wouldn’t you take profit, especially this week?
So market nervousness is understandable right here, right now but, by week’s end, central bank decisions and statements, on top of key economic data and earnings reports, could prove Wilson right or wrong next week. And what starts next week, Budget aside? Yep, it’s May.
I really hope this is a year when we buy in May and stay!
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