To the scoreboard:
Dow: 21,007 +56 (+0.26%)
S&P 500: 2,399 +10 (+0.41%)
AUD/USD: 0.7408 -0.0011 (-0.15%)
ASX200 SPI futures (June contracts – 20 minute delay): 5,872 +55
Iron ore benchmark 62% fines: $US61.73 -$US3.47 (-5.3%)
1. A Macron win is a market win: Emmanuel Macron won comfortably in the French election this morning, as markets expected. European stocks rose on Friday ahead of the election, while in the US a strong non-farm payrolls report provided the impetus for gains on the S&P500 which briefly hit a new record high. ASX200 SPI futures traders have priced in a 55-point climb at the open after the Aussie market fell 1.4% last week.
2. Commodities finally turn the corner: Another reason for the positive mood ahead of this morning’s open is that commodities staged a late rally on Friday. Gains were led by iron ore and steel rebar futures, which finally climbed off the mat and are up 2.89% and 3.02% respectively. Copper, nickel and coal also rose so it should be a good day for the miners. Given the savage swing in spot prices for iron ore last week, it will be interesting to see how long the gains hold for. Business Insider’s six-month chart for iron ore prices shows the recent volatility:
3. Oil price surges back: The oil market fluctuated but found a floor after Aussie markets closed on Friday, with West Texas Intermediate (WTI) crude falling below $US44 a barrel but then climbing back to $US46.22 while benchmark crude rose back above $US50 per barrel. Australian energy stocks fell by 2.5% on Friday as the oil price slumped, but stand to benefit today as the subsequent recovery hasn’t been priced in.
4. Euro gets a bump from French election result: The euro climbed above $US1.10 this morning following Macron’s election win, its highest level since November. Gains in the euro were somewhat tempered by the fact that Macron’s victory was close to fully priced in by currency markets. Analysts will be watching Macron’s first challenge – forming an effective government after he ran an independent campaign and has no major-party infrastructure behind him.
5. Data today: In Australia today, ANZ has its monthly job-ad report. The ABS has building approvals, and NAB releases its monthly business confidence index. China releases its monthly trade data, including a breakdown of imports/exports. The Chinese data carries some extra weight amid growing fears about Chinese economic growth, with last week’s PMIs weaker than expected as authorities crack down on risky lending.
6. US companies remain cautious as earnings rise: Profits in the first quarter for S&P500 companies rose by an estimated 13.9%, around twice as much as revenue growth. It was the best quarterly profit growth result since 2011, The Wall Street Journal reports. Despite that, an analysis of 215 S&P500 companies showed a spending increase of just 1.5% on equipment and buildings in the quarter, with half of the sectors measured showing a reduction in capital spending.
Bonus item: Warren Buffett’s now-famous annual meeting was held over the weekend. Business Insider compiled a list of highlights from the Oracle of Omaha’s 5-hour Q&A session. It’s worth a look here.