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Earnings, calmer oil lift shares

Earnings, calmer oil lift shares

Share markets reclaimed recently lost ground as stronger company earnings reports and more stable oil markets boosted sentiment. Traders in the Asia Pacific region reacted cautiously, pushing futures only modestly higher in overnight trading ahead of a big day for regional data. Gold prices remain elevated, an indication that not all are convinced of a positive outlook.

The Australian PMIs released this morning have the day off to a poor start. While manufacturing in April looks reasonably resilient, the services PMI tanked again to a record low reading of 19.6 on a scale of 0 to 100. This saw the composite read also hit an all-time depth at 22.4. A repeat read on Japan’s PMIs later this morning could cruel local sentiment.

Japanese investment data and Australian credit card spending are also due in the first half of today’s trading session. This afternoon brings New Zealand credit card spending, and CPI data from Singapore. Inflation in March is expected to slip by 0.3%. A weaker read may be written off as pre-Covid19 data, but upside surprise could support the Strait Times Index if it is interpreted as a sign a that the Singaporean economy was stronger than known heading into lockdown.

Bond yield edged higher overnight, drawing traders into an argument about whether the gains for gold was safe haven related or a sign of further breakdown of the previously negative correlation of gold to growth. Currency markets remain steady.

In the US stronger than forecast earnings from Chubb, Delta Airlines, Las Vegas Sands and Nasdaq pushed the S&P 500 up by 2.3%, outstripping the 1.5% gains on many European bourses. Futures indicate mild opening gains for Australia, Hong Kong and Japan, and a slip for Singapore. However the New Zealand share market is up 1.8% in early trading, highlighting the potential for positive surprise after a poor week’s trading so far.

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