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New share records as bonds back off

Tesla, man and machine

Better US leading indicators lifted sentiment and growth exposed assets overnight. US shares hit new record highs as durable goods and factory orders grew at a faster rate than forecast. Although European bonds fell, the US 30 year bond rose, flattening the curve and pushing the yield back from the 2% mark. Gains for base metals and crude oil illustrated the positive market thinking.

Company reporting also bolstered stocks. Ebay not only beat analysts’ estimates of earnings growth in the fourth quarter, they also lifted guidance for the coming quarters. Ebay shares hit an all-time high above $64, before settling back to close up 5%. Financial stock also reported well, and Banks and IT stocks led US indices.

Australian corporate reporting season gets into full swing next week, with releases from Commonwealth Bank, Insurance Australia Group, gold miner Northern Star, builder Cimic and toll road operator Transurban, among many others. This morning, News Corp and its partly owned subsidiary REA Group both unveiled better than forecast earnings for the quarter and half year respectively.

Asia Pacific share market futures indicate opening gains of around 1% across the region today. Australian retail sales are conservatively forecast to show a 4.2% drop in December, in contrast to the all-time highs in the Consumer Discretionary sector. Investors are looking for a leap over this low hurdle.

The data event of the week occurs tonight with the release of the US non-farm payrolls. Economists expect a bounce of around 100,000 jobs, after December’s disappointing loss of 140,000 full-time positions. As economies recover, the risk around important releases reverses. A better than expected economic outcome may bring concerns around Federal Reserve tightening, potentially weighing on stock markets.


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