Records Ahead Of Reports, Fed Decision

By Michael McCarthy (chief market strategist, CMC Markets and Stockbroking)

US stocks set new record highs before slipping into the red in Friday night trading. Currencies and bonds steadied, but industrial commodities slid. In what may be the most influential week of this US corporate reporting season, top names such as Facebook, Apple, Microsoft, Tesla, Amazon and Coca Cola face shareholders.

Friday night reports surprised to the downside. Both Huntington Bancshares and Kansas City Southern bucked the trend in financials and posted earnings below consensus forecasts. A better report from oil services group Schlumberger helped slow the consequent selling. Tonight brings insights to consumer behaviour with reports from Kimberley Clark and Johnson and Johnson.

The US Federal Reserve is universally expected announce it is keeping rates on hold on Thursday night. However there is increased potential for a market reaction following recent hints from board member Evans that a tapering of Fed stimulus could occur as early as the third quarter this year. Low interest rates and high liquidity are central to the performance of markets from US tech to Bitcoin, and any indication of a shift in policy will echo around the globe.

Currencies are calm in early trading, and futures indicate a mixed and muted start to Asia Pacific equity trading this morning. Trading volumes in Australia may be affected by a national holiday tomorrow.

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