Global meets local

Deteriorating industrial sentiment and a flight to safety overnight are set to meet a local bullish impulse head on in local trading today. Further complicating factors include releases from more than twenty top companies at the halfway mark of reporting season and the return of extreme volatility to share trading in mainland China.

Oil markets dropped to a fresh six year low, dragging copper with it despite gains for most industrial metals. This is particularly relevant given yesterday’s market leading gains from the energy sector following Woodside’s less bad earnings results. Bonds and gold rallied as investors fled shares. Newcrest mining may be a delayed beneficiary of this rally, and the conflicting flows in various mining stocks could make for a volatile day in the Materials sector.

Today’s avalanche of earnings reports is also turning negative. So far, Qantas, AMP, Breville and the ASX itself have reported below consensus forecasts, with Adelaide Brighton the lone outperformer. Although Origin, Wesfarmers and iiNet are yet to report, it’s looking like a day of more misses than hits. All eyes turn to Shanghai for the regional lead after yesterday’s 6% range and sentiment reversal to positive.

For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.