US stock markets are currently a great example of the old trading adage that the trend is your friend. The S&P 500 index has rallied 3.8% so far this month as markets respond to good profit results and expectations of a favourable macro environment. However, local markets are likely to remain focussed on profit results with the early open appearing to shrug off US confidence

BHP unveiled a clean result yesterday with investors benefitting from the double benefits of higher prices and improved productivity. However, the response to the result in New York trading was limited. Whether investors are similarly cautious here could be a key to just how strong the local market is today. With BHP’s strategy now bedded down and well executed, the stock price will be all about the outlook for commodity prices. BHP itself sounded a cautious for iron ore and coal which are likely to be the most volatile elements of its near term revenue outlook

Woolworths looks to have achieved, the first essential, element of its turnaround strategy with a 1.9% increase in like for like supermarket sales and improved customer satisfaction. However, profit margins are under pressure due to price competition and the re-introduction of staff incentives. Shareholders have borne the brunt with a big cut in dividend and the next major hurdle for the stock will be whether it can continue to stabilise sales without further significant deterioration in margin.

The slide in the Euro as Marie Le Penn’s polls improve was the other key feature of international markets last night and is an early indicator that French elections could loom larger on the market radar over coming weeks.