Corporate earning results in the US continue to propel equity markets higher. The result from Google and IBM after the closing bell has further boosted sentiment into Asian trading even offsetting for the Asian index the shock of the bombings in Indonesia. With little economic data due for release today, attention will again be focused on corporate results with Bank of America, Citigroup and GE all due to report. As long as corporate earnings keep coming in better then expected then this bullish trend is likely to continue. The key level to watch for in the S&P 500 is 956, this is the high of the previous rally from March and a break would be technically another very bullish signal.

Given the recent debate over foreign investors diversifying their assets away from the US, the latest TIC data makes for interesting reading. Breaking down the data, the total net sales of long-term equities, notes and bonds increased in May to $19.8bn from $11.5bn. Net selling of government notes and bonds totalled $22.5bn, its largest amount since November and reverses the net buying seen in April. Total monthly foreign investment flows fell to $66.6bn in May versus a smaller decline of $38bn in April. It is this figure that most headlines have picked out but it hides the fact that despite net sales by foreign government of $21.8bn in Treasury notes, China, the biggest foreign holder of US treasuries increased its holding of government bonds by $38bn to $801.5bn. Meanwhile, purchases of US stocks during May were at their fastest pace since January 2008 indicating the improved sentiment towards risk  ppetite and the US market. Thus, it would seem, arguably, that the US retains its safe haven status, as well as attracting inflows into its equity market, despite the recent headlines to the contrary.

Sources: Reuters: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.