Stand by for further gains this morning as offshore markets surged on stronger-than-expected US economic growth and as Chinese shares snapped a five-day losing streak.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is expected to open 1.2% higher after Wall Street and European stock indices surged over 2-3% overnight, but its resource stocks that will lead the charge on our market after oil jumped the most in six years.
US gross domestic product (GDP) in the second quarter grew at an annualised rate of 3.7% and that sparked a 10.8% surge in the West Texas Intermediate oil price to $US42.78 a barrel, as copper advanced 4.3% to $US2.3310 a pound and iron ore added 0.5% to $US53.93 a tonne.
Expect big gains for the likes of Santos Ltd (ASX: STO) and BHP Billiton Limited (ASX: BHP) but don't be fooled into thinking the wild swings in the commodity are over. The market is still oversupplied with oil over the medium-term even with the world's largest economy expanding at a faster rate.
But it's not all about resource stocks. Embattled supermarket group Woolworths Limited (ASX: WOW) didn't have much good news to report to shareholders as it reported a 12.5% drop in full year net profit to $2.15 billion as sales slipped 0.1% to $61.15 billion.
What's worse, the company said same-store sales were down 0.9% in the first eight weeks of the current financial year and it needed more time to see results from its turnaround strategy.
Drug maker Mayne Pharma Group Ltd (ASX: MYX) is also in the earnings spotlight after it reported a 65% plunge in net profit to $7.8 million as revenue fell 1% to $141.4 million due to the poor performance of its products sold through third party US distributors. Management has taken all its products in-house and is spending $US65 million to expand its operations in the US.
Other market heavyweights that are expected to post results today include electronics and furniture retailer Harvey Norman Holdings Limited (ASX: HVN), wealth manager IOOF Holdings Limited (ASX: IFL) and law firm Slater & Gordon Limited (ASX: SGH), which is under intense pressure due to a botched takeover in the UK and questions about its accounting methods.
It will be interesting to see if Slater & Gordon can reveal anything to instill confidence after its big de-rating with the stock more than halving in value since January.
Elsewhere, television broadcaster Nine Entertainment Co Holdings Ltd (ASX: NEC) is likely to outperform for the second day following the release of its full year result with at least two brokers upgrading the stock to a "buy" equivalent rating.
Telecom giant Telstra Corporation Ltd (ASX: TLS) will also be in focus after the company revealed that it is considering an investment in a wireless joint venture (JV) with San Miguel in the Philippines.
The company added that financing is being sought in relation to that joint venture but no agreements have yet been reached on the JV.
Telstra's decision shows that it needs to find new growth avenues as its core business cannot sustain the increase in dividend payments that the market is demanding.
But the risk profile for the telco has increased and investors may not have fully appreciated the implications to its valuation from this.
