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S&P/ASX 200 Climbed to its Highest Level Since February 2020

The S&P/ASX 200 index was set to open near 13-month highs following a third straight record close in the U.S. The SPI index futures added six points or 0.1%, signaling a swift reversal of Friday’s four-point setback on the S&P/ASX 200. Interestingly, futures gains were kept in check by declines in oil as well as metals.

The local market strengthened its position last week. The S&P/ASX 200 gained 2.4% in four sessions to its highest level point since February 2020. The All Ordinaries reached an even better result, as it added 2.8% to within 38 points of last year’s all-time high. Moreover, a good week and both indices may see fresh peaks.

When it comes to the major threat to the market it appears to be the national vaccination program. Share prices reflect expectations that the country contained the Covid-19 and the nation is moving towards herd immunity. Nevertheless, the glacial pace of the rollout may force some economists to change their outlooks. The Australian government abandoned its timetable for the program.

A new U.S. reporting season starts this week. Analysts expect Q1 earnings to show a massive snapback from last year’s pandemic-affected results. The reporting season kicks into gear on April 14 with reports from Morgan Stanley, Wells Fargo as well as Goldman Sachs.

Recent strength in the Australian market helped to trigger a rush of initial public offerings (IPOs). This week will bring five floats: Delorean Corporation on Monday, followed by Island Pharmaceuticals, 92 Energy, Iceni Gold, and Black Canyon.

S&P/ASX 200 and U.S. stocks

Undoubtedly, it was a great week for the S&P/ASX 200 but it was a good week for U.S. stocks as well. The S&P 500 added 32 points or 0.77% to reach a third consecutive record. Most of the gains came in the last hour on Friday as traders shrugged off evidence of simmering inflationary pressures.

At the same time, the Dow Jones Industrial Average also claimed a new closing high. It gained 297 points or 0.89%.  The Nasdaq Composite advanced 71 points or 0.51%

Growth stocks reached better results than value counterparts as bond markets largely ignored a jump in wholesale prices. The producer price index rose 1% last month, and this result surpassed expectations. Year on year the producer price index rose by 4.2%, the largest rise in nine years.

The yield on the ten-year U.S. Treasuries reached as high as 1.675% before fading to a two-week low. The retreat to 1.63% encouraged traders to buy rate-sensitive growth stocks. Interestingly, the Russell 100 index of growth stocks added 0.9%, against a 0.5% rise in the value stocks.

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