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Currencies, earnings to spur Asia Pacific

Asia Pacific investors are preparing for a day in the sun following positive leads from international markets and a strengthening US dollar. Better than forecast company earnings in North America are the sign of gathering economic momentum and lower local currencies the method of transmission.

Volumes and volatility are both likely to lift this week as markets absorb a huge amount of new information. China activity indicators, inflation and growth data from Europe and a US Federal Reserve meeting could shape trading. News from London and Brussels on Brexit will draw attention, as will Friday night’s US non-farm payrolls.

US earnings season passed the half way mark on Friday night, with solid results from Amazon, Alphabet and Microsoft driving the Nasdaq 100 higher. Overall earnings growth is running close to 8.5%, supporting recent index gains. Reports from 144 of the top 500 companies will keep analyst awake this week.

Locally investors are likely to ignore the barking dogs of politics as the AGM season rolls on. Low expectations of Canberra mean the latest chaos has little impact on the market outlook. Friday’s precautionary sell off means the Australia 200 index may outperform as it becomes clear that the high court decision on the eligibility of MP’s and Senators makes little difference to business given the existing hamstrung Upper House.

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