Coles results.
The shares of supermarket giant Coles Group Ltd (ASX: COL) will be on watch this morning when it releases its first results since the Wesfarmers Ltd (ASX: WES) spin off. Goldman Sachs has tipped Coles as a company that could surprise during earnings season thanks to strong comparable sales growth in the supermarket category.

ASX futures pointing higher.
The Australian share market could be set for a positive day of trade. At the time of writing SPI futures are pointing to a small gain of 3 points at the open. Wall Street has been closed for President’s Day. In addition to this, oil prices have climbed higher overnight. According to Bloomberg, the WTI crude oil price is up 0.8% and the Brent crude oil price has risen 0.4%.

A fresh wave of bank buying lifted the Australian sharemarket above the 6100 point level as ANZ said it had been too conservative on lending and the Reserve Bank said the next rate move could be either way.

There was no overnight lead from US markets closed for a public holiday, but the S&P-ASX 200 dipped into the red at the open but it rallied to close up 17 points, or 0.28 per cent, at 6106.9 as the lenders countered weakness across most other sectors.

ANZ led the charge despite reporting a decline on mortgage lending last quarter after chief executive Shayne Elliot said the bank may have been “overly conservative in our implementation of some policy and process changes”.

The Australian dollar fell US0.4¢ to US71.10¢ after the Reserve minutes revealed increasing uncertainty over domestic growth momentum as house prices fell.

Sonal Desai, fixed income group chief investment officer at Franklin Templeton, discusses the U.S.-China trade war, its impact on the economy and her views on Fed policy.

The minutes said board members noted that there were significant uncertainties around the forecasts, “with scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate”.

National Australia Bank economist David de Garis said the Reserve was forecasting a peak to trough decline in real dwelling investment of 10 per cent.

But they pointed out that “if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast.”

Government 10-year yields were slightly softer at 2.132 per cent.

The Shanghai composite index was up 0.3 per cent at the close of the ASX as euphoria of the surge in new lending in China abated amid concerns about the size and effectiveness of lending in one month equal to a staggering 5 per cent of GDP.

Westpac head of macro strategy Frances Cheung said although the market’s focus remained on the effect of the global slowdown and US/China trade tensions, the key determinant of China’s softer growth in 2018 was actually structural change, planned and managed by China’s central government.

However, “weak imports of upstream goods by China do not bode well for China’s export outlook in the months ahead”.

Australia and New Zealand Banking Group (ASX: ANZ)

If you don’t already have meaningful exposure to the banking sector then I think it would be well worth considering the shares of ANZ. Although its shares have rallied strongly over the last 10 weeks, I still see a lot of value in them at this level. Especially given its strong capital position and exposure to a business lending market which is performing well. In addition to this, the bank’s shares currently offer a trailing fully franked 5.7% dividend yield.