Australian stocks are poised to jump higher amid investors' love-hate relationship with US interest rates, good earnings from corporate America and a big surge in the oil price.
The US Federal Reserve has put a rate hike in December back on the table as it talked up the world's largest economy and investors decided this time that the news is actually good for markets. Market sentiment has been flip flopping on what the first rate hike since the global financial crisis actually means.
Our market is in agreement that the news is good, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) predicted to rise 0.6% this morning although full year results from Australia and New Zealand Banking Group (ASX: ANZ) could drag on sentiment towards the Big Banks.
ANZ reported cash profit of $7.2 billion and a final dividend of 95 cents a share. Both were below consensus of $7.3 billion and 97 cents a share, respectively, according to Bloomberg.
National Australia Bank Ltd. (ASX: NAB) missed on both these fronts when it released its full year results yesterday that sparked a 2.2% sell-off in its share price to $31.72.
Iron ore miners like Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are also likely to come under pressure as the price of the steel making commodity slumped 3% to just under $US50 a tonne following warnings from China's official forecaster.
The president of the China Metallurgical Industry Planning Association said that Chinese steel consumption will drop 20% over the next 15 years, according to the Australian Financial Review.
In contrast, Rio Tinto and BHP Billiton Limited (ASX: BHP) are forecasting Chinese steel consumption to keep rising over the next decade or more. Only one of them can be right.
On the flipside, energy stocks like Santos Ltd (ASX: STO) could enjoy good support after the West Texas Intermediate crude price surged 6.9% to $46.17 as the Fed voiced confidence on US economic growth.
Investors will also be eyeing Santos as it undertakes an asset sales program with market speculation running rampant over who might be in the bidder's circle.
Meanwhile, funds manager BT Investment Management Ltd (ASX: BTT) and supermarket giant Woolworths Limited (ASX: WOW) will be under the earnings spotlight.
BT reported a 4% increase in net profit to $126.4 million as revenue inched up 2% to $439 million for the year ended September 2015, while Woolies is expected to unveil its September quarter sales result later this morning.
Finally, consumer financing company FlexiGroup Limited (ASX: FXL) is likely to head higher as it emerges from a trading halt after Goldman Sachs and Macquarie Group Ltd (ASX: MQG) upgraded the stock to a "buy" equivalent from "neutral".
FlexiGroup was in a trading halt to undertake a capital raising to acquire Fisher & Paykel's Australian financing business.
This is a stock that's worth keeping an eye on.
