Major share market indices sliced through key resistance levels in strong trading overnight, breaking the bear spell and suggesting the weakness of August and September is over. The bullish outlook is confirmed by rallies in key industrial commodities. US Fed meeting minutes released overnight gave nothing away, and local investors will turn to today’s home lending data to guide share market action.
The Fed minutes reveal a divided board, and contain statements that offer succour to both hawks and doves. The markets are no better informed of Fed intentions than before this release. The other shoe will drop next week, when China GDP, retail sales and industrial production numbers speak to the other major market concern around global growth. In the meantime, investors look set to rush in, and early indications of a 60 point gain for the index could prove timid.
Further rises in copper and oil mean resource stocks are likely to enjoy another day of strong trading. BHP shares traded in the US jumped more than 4% for the second session in a row, and Rio ADRs are also up more than 8% over the two nights. Investor support is widespread, evidenced by CSL trading 2.4% higher.
Home lending data is forecast to rise in August by a little less than 5%. The mix is important, and any signs of rising owner-occupier demand could translate directly into bank buying. However, a preponderance of investor borrowing could be interpreted as unsustainable, and take the gloss off what should be a good day for investors.