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Renewed confidence in equities boosted Wall Street to a positive close on Friday, with the key indices shaking off the negative market sentiment that started 2024 in a downturn. The S&P500 rallied 1.23% to a new record high while the Dow Jones added 1.05% and the Nasdaq ended the final trading session of the week up 1.7%. The rally that ended last week in the US overturned the negative start to 2024 taking all three indices into gains for the year so far. Fresh consumer confidence data out on Friday indicated consumers are becoming more confident in both a soft landing and controlled inflation in the world’s largest economy. As earnings season ramps up in the US, we are seeing companies across insurance, financials and other key sectors post better-than-expected earnings which further boosts investor confidence at a time where earnings were expected to begin easing amid slowing economic growth.

Over in Europe, markets closed mostly lower as the World Economic Forum in Switzerland came to an end. The STOXX600 fell 0.3% on Friday while Germany’s DAX closed mostly flat, the French CAC dropped 0.4% and, in the UK, the FTSE100 ended the day up just 0.04%. The key message out of the economic forum was that while inflation is making good progress in declining to the target 2%, markets pricing in cuts from March is likely premature. UK retail sales data for December also indicated slowing retail spend as consumer sales dropped 3.2% in December, the traditionally high spend holiday trading period, as higher interest rates continue hurting UK consumers.

Locally on Friday, the ASX200 rose 1.02% as investors piled into technology stocks with the sector advancing 3.01% while utilities stocks were the only sector to fall out of favour with investors on Friday. EML Payments led the gains on Friday as the payment services company announced it was shutting down its loss-making PFS card services Ireland business, while Lottery Corp and Jumbo Interactive experienced rallies on news of Australia’s Powerball Jack-potting to the second largest amount in history this week of $150m.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open Monday up 0.35% following the strength on Wall Street that ended Friday’s session in gains for 2024.
• On the commodities front this morning oil is trading down 1% at US$73.20/barrel, gold is up 0.34% at US$2029.48/ounce, and iron ore is up 0.4% at US$129/tonne.
• AU$1.00 is buying US$0.66, 97.79 Japanese Yen, 52.14 British Pence, and NZ$1.08 .

Trading Ideas:

• Bell Potter has maintained a sell rating on Fortescue (ASX:FMG), however, has significantly increased the 12-month price target on the major miner following a review into Bell Potter’s iron ore price forecasts. Near-term pricing upgrades are driven by unexpected resilience in the face of tight margins for Chinese steel producers, high levels of steel inventories and weak Chinese property sector outlook. Longer term though, Bell Potter has allowed for increased price support from growing demand from Indian steel production, Chinese government stimulus and recovering demand in the US and Europe.
• And Trading Central has identified bearish signal on Monadelphous Group (ASX:MND) following the formation of a pattern over a period of 51-days which is roughly the same amount of time the share price may fall from the close of $14.26 to the range of $12.90 to $13.20 according to standard principles of technical analysis.