Commodity jitters see a soft start to the week's trading
A weak lead from the US and ongoing nervousness about commodity markets will see stock market trading start the week on a downbeat note.
Commodity weakness following Friday’s worse than expected, Flash PMI read on China’s manufacturing sector continued into European and US markets. The oil market in particular continues to be sold off and resource sector investors are nervous about how far this trend will continue. At the end of the day, markets are going to need some indication of supply cuts in commodities like oil and iron ore before investors start getting more confident about the short term outlook for prices.
Another move lower today, will leave the ASX 200 index in a clear downtrend following its peak last week. As investors baton down for the beginning of the reporting season, technical traders will be watching to see how the index behaves at the 61.8% and 78.6% Fibonacci retracement levels around 5511 and 5455 respectively. Any sign that the index is basing at either of these levels would be a positive short term development. However, an ongoing slide below the 78.6% retracement level at 5455 opens up the possibility of an ongoing slide towards support below 5250.For further comment from CMC Markets please call 02 8221 2137.