The local market is pointing to a 0.4% rise to 5664 at the open, a fresh six-year high. This will see it smash through the July 31 high of 5644 and could really set the market up for further near-term gains. While global macro factors have been a dominant theme recently, local corporate earnings have not done badly at all and this has been well received by investors.
Several companies are looking to return capital to shareholders and these funds are likely to flow back into the market. The fear factor is also reduced, removing some of the pessimism experienced heading into earnings. With momentum firmly to the upside, buying the dips is likely to be a preferred strategy.
In light of the surge in USD/JPY, which jumped to its highest level since April, the Nikkei is set to benefit from a move today. We are currently calling the Nikkei up 0.6% at 15,550 and if we continue to see this kind of momentum then there’s a good chance it’ll outperform today.
The September meeting is now tipped to be one of the most important of the year, with analysts expecting exit principles and strategy to be on the table for discussion. Jackson Hole is also set to kick off and could spur the greenback higher if we hear a change of tone from Janet Yellen. This might keep USD/JPY bid heading into the end of the week.
The single currency has been under significant pressure this week and, with the greenback remaining bid, EUR/USD looks even more fragile. The pair is trading near one-year lows but the RSI has also dipped into oversold territory. Later today we have flash manufacturing PMIs due out and any indication of further weakness could see the selling pressure continue. However, surprise readings would add to the upside and could see the selling temporarily pause.
The stock broke to one–year highs this week heading into results. While the company is looking to keep its turnaround story alive, first-half earnings released this morning look like they might have fallen short of expectations.
The $5.50 level will be key in today’s trade. This level showed resistance over the past few months and, if the stock can close above it, then the momentum might keep going. Should the stock trade higher, May 2013 highs around $5.75 will be in focus.