The momentum appears positive as global markets ready for a surge of liquidity after the US House gave final approval for President Joe Biden’s $US1.9 trillion ($2.47 trillion) stimulus package and coronavirus vaccinations are accelerated internationally. AMP Capital chief economist Shane Oliver said that markets had been buoyed by good news around economic data, earnings and declining COVID-19 cases, as well as on vaccines and stimulus. But he cautioned that shares could see a correction although it would be hard to time against the backdrop of vaccine rollouts, company earnings still being revised up, inflation staying low and central banks remaining dovish. “The vulnerability to a renewed short-term pullback remains with investor sentiment remaining upbeat, but the broader trend likely remains up as it’s too early to expect a cyclical bull market top with a more sustained global recovery,” Mr Oliver said. He predicted a shift in performance away from investments that benefited from the pandemic and lock downs — such as US shares, technology and health care stocks and bonds — to those that would benefit from a recovery such as resources, industrial stocks, tourism companies and the financial sector. CommSec chief economist Craig James pointed to the benign economic outlook with interest rates unlikely to lift before 2024 and a rapid albeit uneven economic recovery. The week will be dominated by surveys that are expected to show a lift in consumer sentiment and business confidence as the economy kicks into gear after summer and the local profit-reporting season providing a positive guide as 23 major companies update the market. Dr Oliver expected earnings to rebound in this financial year by about a quarter, making up their pandemic driven plunge last financial year. He tipped the largest earnings rises for resources, banks and IT stocks, with healthcare, media and gaming also likely to record healthy earnings growth and retailers to surprise on the upside. Companies expected to report over the week include Suncorp , which will update on lending and housing conditions, as will building supplies company Boral. The biggest results will come from the Commonwealth Bank on Wednesday, with the bank providing a national guide to the state of the economy, and IAG. Thursday is the busiest day for share investors with Telstra leading the day of reports with insurer and financial services company AMP to also update the market on the Ares Management takeover deal. Others to report include the ASX, Transurban, Magellan Financial Group, AGL and Charter Hall.The week will be rounded out by reports from Mirvac, that will update on the housing market, and Computershare.Investors are awaiting a rebound in dividends and chasing stocks benefiting from the surge in housing activity driven by stimulus and low interest rates.



Source link