Volatility declined on international markets last night with US stock markets returning to their moribund state. This has provided a neutral lead for the local market where the main focus will be on the profit reporting season

While it is still early days, the Australian profit reporting season is not at this stage looking as though it will provide a positive catalyst for the ASX 200 index.  Despite regular daily fluctuations the ASX 200 remains firmly ensconced in a trading range. Solid bank results and the expected improvement in mining profits have so far been offset by soft results in a number of industrial companies.

CSL has today produced a solid result with revenue in line or slightly better than expected. However, it remains to be seen whether this result including guidance for underlying profit growth next year in the range of 10.5-16% will be enough to prevent selling given high expectations.

A bounce in the US Dollar was the key feature of international markets last night. This has seen the Dollar Index hold the lows it established in both 2015 and 2016 and has allowed a welcome easing in the Aussie Dollar.

The strong rebound in US retail sales over the past 2 months together with North Korea’s statement that no missile strike near Guam is imminent led to Dollar buying. Strong US retail sales data bodes well for US 3rd quarter GDP growth and it is encouraging to see consumers responding to the improved labour market; low interest rates and rising home equity.