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Mixed signals as shares roll on

Tesla, man and machine

It seems nothing can stop the advancing share market. Stretched valuations, rising Covid infections and tumbling iron ore prices had no impact of share markets overnight, with European and US indices posting further solid gains.

Fortunately, the gains are backed by corporate out performance. US reporting is approaching the half-way mark, and a modest increase in revenues and profits is enough to jump over lower analyst expectations.

Amazon and Google owner Alphabet reported this morning. Both hit record revenues in the fourth quarter of last year, and are higher in after-market trading. Amazon’s CEO Jeff Bezos grabbed the spotlight with news that he will step down later this year to become “executive chairman”.

The Australian corporate reporting season is underway. Amcor delivered an increase in revenues and profits, and lifted its guidance to earnings growth of between 10% and 14%. The US listing of the stock rose, and Amcor shares are expected to lead the share market higher this morning. Bunnings Trust surprised analysts with a 6% lift in profits, although a significant proportion of the increase is in unrealised valuation gains. Nonetheless, like for like rents rose 2% over the full year.

Australian building approvals out this morning are forecast to show a 3% lift in December. Yesterday’s stronger housing finance data suggests that the risk on the read is to the upside. Japan and China release PMI reads later in the session.

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