Shares markets in the Asia Pacific region are set for further gains today after a strong night of trading in the US fuelled by better than expected economic data. Volatility remains elevated, and a sudden shift in sentiment is possible. Weaker commodity prices may dim any reporting season inspired enthusiasm for energy and materials stocks. Markets appear to be moving towards a view that the recent sell off is a correction, not a crisis.
August consumer confidence and July durable goods orders both surprised North American analysts by rising further than expected. This seemed to restore the confidence lost in the previous US session when last hour selling turned indices from gains to losses. European markets traded slightly lower in the lead up to the US market open, but this was most likely a reflection of the 4-5% gains the previous night. All was not well however, as a stronger USD induced tumbles in industrial metals and oil prices, suggesting global industrial remains weak.
Australian index futures markets traded into triple digit gains overnight, before settling back to an 83 lift. The bullish opening impulse may be moderated by weaker commodity prices and some misses so far today from corporate Australia. Ramsay Healthcare, fund manager Perpetual and Nine Entertainment have fallen short of estimates, while Boral is broadly in line. Retail Food Group and Southern Cross Media are eagerly awaited.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.