Between a Rock and a High Place
It’s a “good news, bad news” day for Australian investors, as leads point in different directions and conflicting market forces mean the close today is anyone’s guess. Weaker share markets overnight are offset by commodity gains, and uncertainty around the beginning US reporting season is compounded by recent extraordinary China trade data.
In a divergent performance yesterday Australia shares generally and resource stocks in particular fell heavily after China trade data showed a collapse in both imports and exports for March. However, shares in Shanghai and Hong Kong rallied sharply as investors bet on further stimulus measures. This weakness in Australia comes at a crucial market point, as the Australia 200 index peeled away from the post GFC high at 6,000 for the third time, adding a technical note to the selling.
Sentiment surrounding the US reporting season could also weigh. A stronger USD has analysts predicting a quarterly earnings contraction in the US, for the first time in more than two years. Cautious investor behaviour in the US could translate to a downdraft in Australia.
A bounce in oil and iron ore prices overnight could see resources go from zero to hero today. Consumer confidence and a business survey could influence trading, as will the openings in Tokyo and Hong Kong.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
Australian shares have experienced a mixed performance due to conflicting global market forces. While weaker share markets were observed overnight, gains in commodities have provided some balance. However, recent China trade data showing a collapse in imports and exports has led to a decline in Australian shares, particularly in resource stocks.
The recent China trade data, which revealed a significant drop in both imports and exports for March, has negatively impacted Australian resource stocks. This data has contributed to a decline in these stocks, as China is a major trading partner for Australia, particularly in the resources sector.
Shares in Shanghai and Hong Kong rallied sharply as investors are betting on further stimulus measures from the Chinese government. This optimism has led to a positive market response despite the negative trade data.
The Australia 200 index dropping from the post-GFC high of 6,000 for the third time adds a technical note to the selling pressure. This level is seen as a crucial market point, and its failure to hold could indicate further market weakness.
The US reporting season could weigh on Australian investors as a stronger USD has led analysts to predict a quarterly earnings contraction in the US for the first time in over two years. This cautious investor behavior in the US could potentially lead to a downdraft in Australian markets.
Commodity prices, particularly oil and iron ore, play a significant role in the current market environment. A bounce in these prices overnight could see resource stocks recover from recent declines, shifting them from 'zero to hero' in today's trading.
Consumer confidence and business surveys can significantly influence market trading as they provide insights into the economic outlook and business sentiment. Positive results from these surveys could boost investor confidence and lead to more favorable trading conditions.
Monitoring market openings in Tokyo and Hong Kong is important as these markets can set the tone for trading in the region. Their performance can influence investor sentiment and trading decisions in Australia, especially given the interconnectedness of global markets.
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