Investors looking for a hat trick
Australian investors are looking for a third daily rise in a row as positive US data and quieter commodity markets further ease the pressure from a constrained global growth outlook. Falls in volatility, elevated trading volumes at lower levels, and a lower Australian dollar all point to the potential for under invested managed funds to continue to support the local market. Futures markets are indicating a lift of 11 points at the open, but these key short term factors may see additional gains over the session.
Energy stocks were the best performers on US bourses, after a modest lift in oil prices. However, investment bank downgrades of key local energy stocks could overwhelm this lead in trading today. After defensive healthcare and utility sectors lead the charge yesterday, it may be the turn of the financial stocks to do some heavy lifting. Telcos were also a notable laggard yesterday, and may play catch up today.
While journalists torture gloom and doom headlines from yesterday’s GDP data, the market view on any interest rate cuts is much more conservative. March short term interest rate futures are trading at the yield equivalent of 2.4% - pricing a 40% chance of a cut in February. This contrasts strongly with claims of 70-80% pricing, or an “almost certain” rate cut. Regardless, share trading volumes may drop away ahead of Friday night’s read on US non-farm payrolls.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
Australian investors are hopeful for a third consecutive daily rise due to positive US data and calmer commodity markets, which are easing the pressure from a constrained global growth outlook.
Under-invested managed funds are potentially supporting the local market, as indicated by falls in volatility, elevated trading volumes at lower levels, and a lower Australian dollar.
Energy stocks are the best performers on US bourses, thanks to a modest lift in oil prices. However, local energy stocks might face challenges due to investment bank downgrades.
After defensive healthcare and utility sectors led the charge, financial stocks might do some heavy lifting today. Additionally, telcos, which lagged yesterday, may play catch-up.
The market sentiment on interest rate cuts is conservative, with March short-term interest rate futures trading at a yield equivalent of 2.4%, indicating a 40% chance of a cut in February.
While media headlines focus on gloom and doom from GDP data, the market view is more conservative, especially regarding interest rate cuts, contrasting with claims of a 70-80% chance of a cut.
Share trading volumes may decrease ahead of Friday night's US non-farm payrolls report, as investors await this key economic indicator.
For further commentary on the market situation, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
Call 1300 880 160
Start a chat
Schedule a call
