Although higher iron ore prices and calmer bond markets provide a couple of positives for markets today, investors head into the last day of a tough trading week with plenty to be cautious about.
There is no reason yet to suggest that the recent bond rout has come to an end. However, the fact that selling momentum was arrested in international bond markets last night will give equity investors some pause for relief today.
The ongoing rally in iron ore prices is another bright spot for today’s market. The sector may also be helped by this morning’s press reports that Fortescue is considering selling down equity in its Chichester iron ore hub. Pre-emptive action to reduce pressure on Fortescue’s balance sheet should see equity investors further reduce the risk premium applied to this stock.
However, despite these positives, traders have plenty of reason for caution. The upcoming long weekend provides another reason for Australian share traders to be risk averse. There will be two trading sessions on international markets before the local market opens again on Tuesday. With bond markets volatile, Greek debt negotiations at crunch point and data on US jobs and China’s trade to be released before due before our markets re-open, a safety first approach seems logical.
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