Another day of recovery in US markets and strong gains in the oil price should deliver a positive open to the local market.
Energy stocks are likely to build on yesterday’s good gains. Buyers are positioning for cyclical recovery in this sector with merger and acquisition potential providing additional support.
Gold miners on the other hand are likely to be a weak spot in today’s market. The fact that gold is down $50 over the past week reinforces its short term vulnerability to the increased probability of a Fed rate hike. Janet Yellen’s congressional testimony and other Fed speeches will be a key focus for traders tonight.
Yesterday’s RBA statement will increase market focus on the partial indicators of economic growth in Australia. The RBA has made it clear that inflation will not stop it cutting rates if demand deteriorates. This puts the near term focus on growth rather than inflation. Today’s retail sales and trade data will be seen in this context. Misses in either direction have the potential to alter the market outlook for Australian interest rates and the Aussie Dollar.