Market tipped to follow US to record

A POSITIVE start for the sharemarket is expected after Wall Street hit record highs on Friday as earnings reports outweighed concern over a resurgence of coronavirus.

Futures suggest the S&P/ ASX 200 index will break its high of 7406.2 points. The ASX 200 rose 0.1 per cent to a record close of 7394.35.

On Wall Street, the Dow Jones rose 0.7 per cent to 35,061.55, the Nasdaq rose 1 per cent to 14,836.99 and the S&P 500 also rose 1 per cent to 4411.79. All three are record highs.

West Texas crude oil futures rose 0.2 per cent to $US72.07 a barrel, Comex copper futures surged 2.5 per cent to $US4.456 a pound, spot gold slipped 0.3 per cent to $US1802.15 an ounce and Singapore iron ore futures fell 2.1 per cent to $US193.25 a tonne.

Notwithstanding economic uncertainty caused by Covid lockdowns in Australia, a positive start to the US earnings season and Wall Street’s ability to look through rising Covid numbers last week should help Australian sentiment.

“So far, the US June quarter earnings reporting season is only 24 per cent done but 87 per cent of results have beaten earnings expectations, 81 per cent have beaten on revenue and consensus earnings expectations for the quarter have been revised up from 62 per cent year on year at the start of July to now 69 per cent with upside surprise concentrated in cyclical sectors,” AMP Capital chief economist Shane Oliver said. “This could end up closer to 90 per cent.”

Mr Oliver said expectations of improving global growth and earnings from more fiscal stimulus, economic reopening and still low interest rates augurs well for shares.

Events this week include Australia’s June quarter CPI data on Wednesday and the Federal Reserve’s interest rate decision on Thursday.