Misleading Leads
After a night of weak trading in shares local futures markets are indicating falls at the opening for most Asia Pacific markets. However, USD weakness has once again boosted commodity prices and may see support for Australian stocks despite a higher AUD.
US Fed vice chairman Fisher commented that a gradual rise in rates was not a given, and that a cut may follow the first rate rise. The USD fell against most currencies. Explosive gains for copper and a lift in oil prices despite bearish commentary from OPEC officials mean the commodity based Brazilian real, South African rand and Australian dollar lead the rises. This in turn should lead to support for energy and mining shares today, with the potential to push the Australian share market into the green.
China bears are expecting a weakening in the flash manufacturing PMI due around mid-session. While this would still leave it in expansionary territory, it represents a further positive risk for traders if there is a post new year holiday bounce back. Further supporting a swing to positive sentiment is a gain in the weekly consumer confidence reading released this morning.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
USD weakness can boost commodity prices, which may support Australian stocks, especially in the energy and mining sectors, despite a higher Australian dollar.
US Fed Vice Chairman Fisher mentioned that a gradual rise in interest rates is not guaranteed, and there might be a rate cut following the first rate increase.
Commodity-based currencies, including the Australian dollar, are rising due to explosive gains in copper and a lift in oil prices, despite bearish commentary from OPEC officials.
The flash manufacturing PMI from China is expected to show a weakening, but it remains in expansionary territory. This could present a positive risk for traders if there is a bounce back after the New Year holiday.
An increase in the weekly consumer confidence reading can support a swing to positive market sentiment, potentially boosting stock market performance.
The energy and mining sectors might benefit from the current market conditions due to rising commodity prices and a supportive environment for commodity-based currencies.
The Australian share market might move into the green due to support from rising commodity prices and positive sentiment driven by consumer confidence and potential gains in the energy and mining sectors.
For further commentary on the market situation, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
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