Tesla shares +22%, laying rosy runway for Mag 7 stocks | Bond yields behave | Japan signals no hike next week | WiseTech upgraded after 28% sell off

The US benchmark index, the S&P 500, rose for the first time in four days, and the Nasdaq clawed up 0.8%. It was thanks to better-than-expected US corporate news, US economic data, and Japan saying they are not going to hike interest rates next week. Phew! So bond yields behaved — falling from 3-month highs, the US dollar index fell, as did the market’s fear gauge (the VIX), while oil dropped. And gold held at record highs.

Tesla shares rose 22%, its biggest gain since May 2013, spurring a rally in the “Magnificent Seven” stocks, which hit a three-month high. For investors, Tesla’s results and bullish outlook laid out a runway for potential earnings beats from the Mag 7 cohort. And if Tesla’s and Netflix’s results were something to go by, then you might expect cracking report cards and rallies in Google, Apple, Meta, and Microsoft shares when they report next week. Given these are some of the most influential companies on the stock market, when they rise, they usually take the market higher. But if they disappoint, things could get very ugly very quickly, and the market might pull back, especially as margin loans on share trading accounts are at record all-time highs. However, if the market does pull back, you might expect dips to be bought, especially as there is now a new record of cash and money-market funds on the sidelines, standing at US$6.51 trillion.

Let’s start big picture first - it seems the Aussie market will have risk-on rally  - focusing on tech and interest rates sensitive stocks, not only has tech rose overnight on Wall Street. But because Australian bond yields fell from their five-month highs. This suggests traders believe Australia’s economy can continue to grow without the need of RBA rate cuts. Yesterday's services sector data showed there is plenty of strength gaining in services, which are critical to Australia’s economy (accounting for 70% of GDP).