The Australian market was sold off heavily at the start of the day with the materials and energy sectors driving the market lower on the back of weaker commodity prices. After a 4% drop on Friday, iron ore prices have fallen further today after China’s economy slowed further in the first quarter, raising questions of future demand for the metal.
The double-top formed recently on the Australian market has sparked some technical selling early in the session. It is a very different story on other Asian bourses in the region. Shanghai and Hong Kong are up over 1.6% following Peoples Bank of China’s governor Zhou Xiaochuan’s comments last weekend. He stated that China’s growth rate had fallen a bit too far, sparking speculation that the PBOC will lower both the benchmark lending rates and bank’s reserve ratios in a bid to stimulate their economy. As the strength of the Asian markets started to come online, selling on the Australian market slowed and recovered some lost ground. Coming into the close, we are over 20 points off this morning’s lows.
It will be a shortened trading week, with most equity markets closed for Good Friday. Not much in terms of data coming out this week, although investors will look to Wednesday’s manufacturing data out of China and Europe.For further comment from CMC Markets please call 02 8221 2124.