Groundhog Day
Weaker overseas share markets, pressure on key industrial commodities and futures indicating a fall at the Australian opening – sound familiar?
A strong supportive move yesterday after the People’s Bank of China punished yuan shorters could mean the dominance of sentiment in setting market direction may end today. Crucial GDP, industrial production and retail sales numbers will speak to both outright levels of growth and economic transition in China. Combined with a strengthening yuan, in line numbers should put paid to the idea the Chinese economy is unravelling, despite a hard core of bears who will question the accuracy of any data that contradicts their views.
In the lead up to the mid-session data drop traders are likely to focus on the ongoing weakness in oil. Mining and drilling stocks are likely to reprise yesterday’s slump, and gas exposed utility stocks may fall under the same influence. Strength in telcos was a feature of the previous session, and the lower Australian dollar will have day traders looking for international support for banks.
Frequently Asked Questions about this Article…
Weaker overseas share markets can lead to a fall in the Australian market opening, impacting investor sentiment and potentially causing fluctuations in stock prices.
The People’s Bank of China can influence market sentiment significantly, as seen when their actions against yuan shorters led to a supportive move in the market, potentially stabilizing sentiment.
Chinese GDP and industrial production data are crucial as they provide insights into the country's economic growth and transition, affecting global markets and investor confidence.
A strengthening yuan can counter fears of an unraveling Chinese economy, potentially boosting investor confidence and stabilizing markets.
Ongoing weakness in oil prices can lead to a slump in mining and drilling stocks, as lower oil prices may reduce profitability and investor interest in these sectors.
Gas-exposed utility stocks may be influenced by oil prices because fluctuations in energy prices can affect their operational costs and profitability, impacting investor sentiment.
In the previous market session, the telecommunications sector showed strength, indicating potential investor interest and resilience in this area.
A lower Australian dollar can make Australian banks more attractive to international investors, as it may enhance the competitiveness of their services and improve investment returns.
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