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Mixed Signals

Solid US markets and the ongoing rally in the oil price should deliver a firm open for stocks this morning. However, recent data has been mixed and buyer optimism may remain subdued

US stock markets continue to grind higher, driven by yet another impressive profit reporting season. This provides a positive lead for the local market this morning.

Energy stocks are also likely to be in favour today as the oil price rallies without yet attracting a significant increase in US shale oil production. US rig counts remain steady while inventories are declining.  This combination is allowing the oil price to rally, probing for the level required to attract new supply.

However, it may not all be smooth sailing for the ASX 200 today. Bank investors are now waiting on profit reports from NAB and Westpac. Yesterday’s comments from Bendigo Bank suggest there could be as much focus on outlook comments as on the results themselves. It’s clear from Bendigo’s comments that APRA’s moves to restrain housing lending are having an impact while competition in domestic lending markets not impacted by APRA’s recent changes is intensifying.

The dip in China’s manufacturing PMI last month show that recent initiatives to improve the environment have led to a dip in some sectors. A steady outlook is about the best that can be expected for the broader Chinese economy over coming months

Myers’ sales results draw a distinction with another troubled retailer, Big W which managed to stem the rot of recent sales declines last quarter. While Myer management is improving efficiency with gains in sales per square metre of floor space it is yet to induce customers to increase total comparable store sales.  

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