Fed Soothes the Market Beast

Investors may enjoy a reprieve from the raging bears after Fed Chair Janet Yellen expertly trod the middle path between voicing market concerns and sticking to the Fed’s tightening program. Calmer commodity markets and the return of trading in Hong Kong after holidays may see less sentiment driven trading today.

Strong trading in Europe and a surge following Yellen’s pronouncements gave way to a flattening sell-off late in the US session. The sectoral performance largely reflected company reports, with IT and healthcare stocks topping the performance table.

The Australian reporting season will affect investor action today. Cochlear and property groups Mirvac and Goodman have all reported above estimates this morning, and should add support. Resources may trade cautiously given benign commodity trading overnight and the release of Rio’s full year results after market.

The return of Asia Pacific investors from holidays could also see a change in market behaviour. When concerns about global banking hit markets this week, the inability to trade most Asian markets and the lower correlation of the Japanese index saw Australian shares belted by heavy bank and index selling. As Hong Kong comes back on line mid-session traders will watch closely for any signs of rotation, with those aggressively selling local shares over the last few sessions buying Australia and selling HK.