Mixed leads mean mixed action

Predicting the outcome of share market trading today is more difficult than usual. Positive moves in European shares contrast with a flat US performance. Better growth numbers over the past week are offset by weaker durable goods and consumer numbers in the US overnight. Soft industrial commodity prices are offset by two month highs in global shares. Lower oil prices are offset by tonight’s OPEC meeting. Adding to the difficulty, the local index has reversed the previous day’s direction for all three trading days this week.

Who’d be a day trader?

On balance, expectations point to gains in finance and healthcare, and weakness in resource stocks. However, yesterday’s late session action, and a close at the day’s highs, suggest unsatisfied buyers who may once again ignore overnight leads. Further support for Australian shares may come from international participants eyeing a lower AUD.

Private capital expenditure data and new home sales numbers also have the potential to change the direction of sectors, and the broader market. Q3 capex is expected to fall 1.9% from the previous quarter’s 1.1% gain. This gloomy consensus is in line with resource share prices that seem predicated on further falls in underlying commodities, and forecasts that OPEC will not reach agreement on production cuts. The glass half full stance may means risk in the market today is on the up side.

In individual shares, Medibank Private remains the main game, with concerns that trading today may see lower prices than the $2.08 low touched yesterday.

For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.