Cautious start to the week
Markets will start the new week without much lead from international markets and with a large amount of macro data due over coming days likely to dictate trader caution.
Weak oil and gold prices will do little to help investor sentiment towards the resources sector. Investor sentiment towards BHP will also be tested by news that the Brazilian Government’s ambit claim for damages against BHP and Vale over the Samarco disaster could be around $7bn.
Gold appears to be getting out ahead of the $US in reacting to upcoming decisions by the ECB and Fed. While the US Dollar has been well supported, it has so far been unable to push into new high ground ahead of these meetings. Gold on the other hand, is beginning to break below support. A continuation of these trends would set up divergence between gold and the $US which is likely to be resolved once the ECB and Fed decisions are known.
By the end of this week markets will have more clarity on the potential for divergence between the ECB and Fed. The ECB decision on further monetary stimulus will be announced on Thursday while Friday’s US jobs data represent one of the last boxes to be ticked prior to the Fed’s rate hike decision. Investors will also have a major update on the state of the Australian economy this week with the final round of data for the September quarter, as well as a number of updates for the month of October.
Oroton Group’s advice that sales this financial year had begun well with positive like-for-like sales over the first 17 weeks builds on solid quarterly sales reports by David Jones and Myer. These results represent a potential “green shoot” and provide hope that consumer discretionary sales will be a plank of support for the economy over coming months.
Frequently Asked Questions about this Article…
Weak oil and gold prices can negatively affect investor sentiment, particularly in the resources sector. Investors may become cautious, especially when companies like BHP face additional challenges such as legal claims.
The Samarco disaster could impact BHP's stock performance due to the Brazilian Government's claim for damages, which could be around $7 billion. This legal issue may test investor confidence in BHP.
Gold is reacting to upcoming decisions by the ECB and Fed, while the US Dollar remains stable. This divergence may resolve once the ECB and Fed announce their decisions, potentially affecting gold and currency markets.
Investors should watch for the ECB's decision on monetary stimulus, US jobs data, and updates on the Australian economy, including the final data for the September quarter and October updates.
Consumer discretionary sales in Australia are showing positive signs, with companies like Oroton Group, David Jones, and Myer reporting solid sales. This trend could support the economy in the coming months.
The ECB's decision on further monetary stimulus is crucial as it could influence market trends and investor strategies, particularly in relation to the Euro and European markets.
The US jobs data is one of the last key indicators before the Federal Reserve's rate hike decision. It provides insight into the health of the US economy and can influence the Fed's monetary policy.
The potential 'green shoots' in the Australian economy include positive sales reports from consumer discretionary companies, suggesting a possible recovery and support for economic growth.
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