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Earnings to drive the week

A benign market calendar and a US holiday overnight indicate that corporate earnings could drive action for the rest of the week. Yesterday’s stronger than forecast China GDP and industrial production data boost the macro outlook, balancing the economic risks of rising Covid restrictions.

Tonight a number of US heavyweights will (virtually) face investors. Goldman Sachs and Bank of America are under pressure after last Friday’s stellar results from Citibank and Morgan Stanley. While the individual stocks will no doubt provide first blush reactions, the overall health or otherwise of the US financial sector informs broader views on the economy, and could have strategic implications.

Oil engineers Haliburton and broker Charles Schwab also report tonight, but it is Netflix that will most likely take the spotlight. It is one of the five tech leaders that account for half of all US share market gains since last March. Company guidance is for quarterly earnings per share of $1.35, and analyst consensus is at $1.36.  The stock is trading close to $500, down from the Covid highs of $575.

In local reports, Rio Tinto unveiled its quarterly sales this morning. A small beat in iron ore production may drive responses given the significantly stronger prices for the key steel input. Positive guidance for 2021 may support any bullish market response.

Futures point to a positive start to Asia pacific trading although lower volumes may mean this indication is less reliable than usual. The local economic calendar is reasonably clear leaving traders company earnings and crypto volatility as potential opportunities.

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