Buyers are back
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.
Frequently Asked Questions about this Article…
Major share market indices have broken through key resistance levels, indicating a bullish outlook. This is supported by rallies in key industrial commodities, suggesting that the weakness seen in August and September may be over.
The US Federal Reserve meeting minutes revealed a divided board, offering insights for both hawks and doves. However, the markets remain uncertain about the Fed's intentions, leaving investors to look for other indicators to guide their decisions.
Investors should keep an eye on China's GDP, retail sales, and industrial production numbers due next week, as these will address concerns about global growth and could significantly impact market sentiment.
Resource stocks are benefiting from further rises in copper and oil prices. For instance, BHP shares traded in the US have jumped more than 4% for two consecutive sessions, and Rio ADRs have increased by over 8% in two nights.
Home lending data is forecast to rise by just under 5% in August. If there is an increase in owner-occupier demand, it could lead to bank buying. However, if investor borrowing dominates, it might be seen as unsustainable, affecting investor sentiment.
Rallies in key industrial commodities are contributing to a bullish market outlook. These rallies suggest strong demand and economic activity, which are positive indicators for the share market.
BHP shares traded in the US have seen a significant increase, jumping more than 4% for two sessions in a row. Similarly, Rio Tinto ADRs have risen by over 8% across two nights, reflecting strong investor support.
The current market sentiment, characterized by breaking resistance levels and strong commodity rallies, suggests a positive outlook. Everyday investors might find opportunities in resource stocks and should monitor economic data for further guidance.
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