The Australian share market looks set for another solid open this morning. The rally in advance of the upcoming profit-reporting season in Australian and the US is continuing.
However, investors will have a weather eye on the sharp jump in long bond yields over the past 24 hours. US 10-year bond yields were up .07% to 2.55% last night. This has triggered a similar lift in the Australian 10 year yield to 2.74% this morning. The possibility of rising inflation and bond yields is at the top of many stock investors risk lists for 2018.
Last night’s increase in yields comes ahead of substantial auctions of US notes this week and a forecast increase in supply over 2018 as US government debt grows. While bond yields are far from levels that represent a concern, investors will be alert to the possibility of a trend towards rising yields [RS1] becoming established.
The US oil price pushed clearly through chart resistance last night as markets anticipated that another healthy decline in inventory will be revealed by this week’s data. This should see energy stocks supported this morning. However, rising petrol costs are shaping as a growing headwind for sales growth in the fragile retail sector.
Another night of gains in US stock indices will be supportive for the ASX 200 this morning. However, the latest session was the least impressive of the six successive gains in the US S&P 500 index. In signs of flagging short-term momentum, last night’ s rally was concentrated in only four industry sectors within the index. The others were all weaker. The index also finished near its low for the session.
Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.
