Stunningly strong readings on services and composite PMIs drove European shares higher overnight despite some disappointment with continental retail sales. However, investor enthusiasm in the Asia Pacific region today may be tempered by lower metals prices and a sour report from Walt Disney that weighed on media stocks and US markets.
Futures markets are pointing to modest gains at the open, but the initial impulse could be overwhelmed by an employment reports and Rio’s full year results. The ongoing slump in commodities will likely reverse yesterday’s gains in the materials sector, kicking out the sole support in Australian trading. Rio’s full year result could add to the resource selling as it is expected to slash profits to somewhere between $2.5 and $3.5 billion, a shadow of last year’s $9.45 billion.
Today’s jobs numbers could also spook investors. A US rate hike in September is almost certain. A read today significantly higher than consensus of 10,000 new jobs, or an unemployment rate below 6.1% may nail shut the coffin on any further Australian rate cuts and produce a further drag on sentiment for the session.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.