The long awaited Financial System Inquiry report will be released on Sunday but if the last couple of day’s market action is any guide, bank shareholders don’t appear too phased. Against the background of mixed international leads, whether or not this support for bank stocks continues might hold the key to how the ASX200 index fares today.
While international markets were disappointed that the ECB failed to announce fresh QE initiatives this month, its forecasts point to the probability that this will only be temporary delay. The lower forecasts for inflation and economic growth announced by the ECB will not be sufficient to generate the sort of jobs growth that would allow inaction. History suggests that the risk to the ECB forecasts is to the downside, an outcome which would also make inflation uncomfortably close to zero.
The release of the US jobs figure, tonight Australian time, is also likely to dictate caution amongst traders today. While the US economy continues to expand at a moderate pace there has been some patchiness in recent data including consumer confidence, personal spending and durable goods orders. Against that background, markets will be looking for assurance that the momentum of jobs growth is being sustained in the US.For further comment from Ric Spooner please call 02 8221 2137.