Market Update: Wall Street Ended On Positive Note, Thanks To Earnings

  • Oct 17, 2018 AEDT
  • Team Kalkine
Market Update: Wall Street Ended On Positive Note, Thanks To Earnings

After witnessing strong downtrend because of the higher yields and global concerns, finally, the US markets witnessed some sort of optimism. On October 16, 2018, Dow Jones Industrial Average ended the session by advancing 2.17% or 547.87 points to 25,798.42. Other major indexes also witnessed the strong momentum yesterday. The primary reason which fueled the rally in the US indices are the bumper corporate earnings. The tech stocks, which were the primary concern of the market players, also recorded strong momentum. Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) ended the day by rising 3.98% and 3.35%, respectively. Recently, these stocks witnessed strong downtrend and the short sellers were using these stocks as instruments to hedge their losses amidst the global downturn in the equities. On October 16, 2018, Goldman Sachs (NASDAQ: GS) and Morgan Stanley (NASDAQ: MS) witnessed strong momentum on the back of reporting bumper earning numbers.

Can Optimism Continue? If Yes, For How Long?

The strong momentum in the markets which was witnessed is not likely to sustain for a long period and soon the market players might be surprised with the correction. Why? This is because the boost in the markets was mainly due to strong corporate earnings and not because of some solid macroeconomic factor. In addition to this, the global concerns like trade tensions, heightened oil prices as well as concerns over Saudi Arabia and the US are still weighing on the investors’ sentiments. The oil prices are again back on their increasing trend mainly because of the concerns over the demand and supply mismatch.

What Australian Markets Suggest Investors?

The Australian markets witnessed positive momentum and they ended on the positive note which was widely anticipated by the investors and participants in Australian markets. This optimism was widely supported by the favorable momentum in the markets on the global basis. Another factor which could have aided the positive momentum in Australian markets is the stronger outlook of Reserve Bank of Australia or RBA on the labor market. As per the deputy governor of the apex bank, the labor market is experiencing optimism which is evident by a fall in the unemployment rate. Strengthening the labor market generally helps the economy in witnessing growth because of the increased spending and favorable consumer confidence.

Let us now see how the index has performed. S&P/ASX200 ended the session at 5939.1 which implies an increase of 69.2 points or 1.2%. Bellamy’s Australia Limited (ASX: BAL) and Emeco Holdings Limited (ASX: EHL) ended the day higher as these stocks advanced 12.5% and 10.145%, respectively. However, Afterpay Touch Group Limited (ASX: APT) and Credit Corp Group Limited (ASX: CCP) ended the day by declining 18.929% and 9.2%, respectively.

As per the global market strategists, if the prices of oil increases, the Australian economy is expected to witness the negative impacts because of increased petrol prices. In addition, the impact is expected to be felt on the equity markets as well if the fuel consumers like miners as well as airlines were unable to reduce the losses because of the increased costs.

 

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