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Global markets were mixed overnight as the major US market indices were little changed.
Wall Street’s three major indexes struggled for direction as Treasury yields inched up to levels (with the 10-year yield closing in on 3%) that have spooked investors in recent months. The move higher in US interest rates also saw the US dollar strengthen to its highest levels in about 3-months versus both the NZ dollar and Aussie dollar. One of our long-held investment themes has been for a stronger US dollar versus the AUD & NZD over the medium term.
Markets also continue to digest corporate earnings announcements in the US, and as touched on yesterday a number of large Tech companies will be reporting results. With 87 S&P 500 Index companies having reported first quarter 2018 results, earnings for the quarter are tracking to an impressive 20% year-over-year increase, above the 18% expected heading into earnings season. The strong increase is being driven primarily by solid economic growth, a weak U.S. dollar, and the new tax law.
3 Things Markets Will be Watching this Week
1. Corporate earnings season in the US will gather pace this week with about one-third of the S&P 500’s members scheduled to report in the next five days.
2. Investors will continue to watch fallout from the Hayne royal commission into the financial sector in Australia.
3. The latest Australian inflation data is published on Tuesday.