Foolish Preview: A positive night in the US, ASX poised to rise


After a slow start, the US stock market extended yesterday’s big gains with an impressive follow-through jump today.

In some ways, investors seem to want news to be good but not too good, as the prospect of some form of government stimulus has acted as a backstop against major market declines ever since the financial crisis. The Dow Jones ended up with a gain of more than 110 points, or 0.9% as the broader U.S. market outperformed most of the rest of the world. The broader S&P 500 rose 0.7% overnight with a similar gain for the Nasdaq.

The US market was closed by the time Standard & Poor’s released their downgrade of Spain’s credit rating by two notches to BBB+.

The ASX SPI futures index is pointing to good gains on our market this morning, with a gain of 18 points this morning, to close up 0.4% to 4,399.

In some coincidental timing, Amazon.com (Nasdaq: AMZN) overnight announced earnings that topped expectations, with shares up 8% in after-hours trading, while JB Hi-Fi (ASX: JBH) has this morning announced that while it will achieve its sales target for FY12, it now expects earnings to be lower than initially forecast.

While Amazon clearly operate in many more countries and categories than JB Hi-Fi, it’s hard to escape the comparison.

In other news this morning, the Federal Court upheld an appeal from Telstra (ASX: TLS), the NRL and AFL against Singapore Telecom’s (ASX: SPT) Optus and their attempt to rebroadcast live sport with just a very short delay.

Other earnings have been announced by Resmed (ASX: RMD) announced yet another quarter of strong sales and profit growth, with the latter rising 21% on an 11% revenue increase, while Macquarie Group (ASX: MQG) has reported a profit that has dropped by almost one quarter on last year.

Overall, despite a couple of soft profit announcements, the market is likely to move higher today, on the back of the US lead (the Spanish debt situation notwithstanding).

As always, the investment race is much longer than just one day – by all means take advantage of opportunities that present themselves, but don’t get caught up in short-termism – it can be damaging to your financial health.

he ASX is already on the move in 2012, and Goldman Sachs experts recently said they reckon S&P/ASX 200 could top 5,000 next year. Read This Before The Coming Market Rally is a must-read for investors who don’t want to miss out on the party. Click here now to request your free copy, before it’s too late.

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Scott Phillips is an investment analyst with The Motley Fool. Scott owns shares in Telstra and Amazon.com. You can follow him on Twitter @TMFGillaTake Stock is The Motley Fool Australia’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

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