How far will banks be sold?
This morning’s market open is likely to be characterised by trader caution ahead of potentially significant news events; a weak lead form overseas markets and ongoing reaction to ANZ’s capital raising.
The extent of ongoing selling in major bank stocks will be one of the key features of this morning’s trading. While ANZ’s profit update yesterday was solid in most respects there may be some concern that greater than expected bad debt provisioning will herald a sector wide cyclical change in what has been an area of strength for Australian banks in recent times. Investors will also be alert to the possibility that CBA will follow NAB and ANZ with a capital raising when its results are released next week.
Market reaction to Rio’s better than expected result will be another focus for today’s markets. Rio continues to please investors by doing a better than expected job on those aspects of the business that it can control. While the stock had rallied leading into yesterday’s announcement further gains are possible as investors search for relative value. However, investors will be conscious of the ongoing risk of lower commodity prices meaning the rally could be capped with significant technical resistance on the horizon between $55 and $55.50.
Markets are confronted with a number of potentially outlook changing news events in the near future including the RBA’s statement of monetary policy this morning, US labour market data tonight and, potentially most significantly of all, China’s trade data over the weekend. Traders are likely to be cautious ahead of these releases.
The energy sector will again be in focus today following yet another progression in the oil markets relentless downward slide.
For further comment from CMC Markets please call 02 8221 2137.
Frequently Asked Questions about this Article…
Traders are cautious about the market open today due to a weak lead from overseas markets and the ongoing reaction to ANZ's capital raising. Additionally, there are several potentially significant news events on the horizon that could impact market sentiment.
ANZ's capital raising has raised concerns among investors about a potential sector-wide cyclical change, especially with greater than expected bad debt provisioning. This has led to ongoing selling in major bank stocks as investors remain cautious.
Yes, investors are alert to the possibility that CBA might follow NAB and ANZ with a capital raising when its results are released next week. This is a key concern for investors monitoring the banking sector.
Rio's better than expected results have pleased investors, as the company has managed well the aspects of its business it can control. This has led to a rally in its stock, although investors remain cautious due to the risk of lower commodity prices.
Key news events that could impact the market outlook include the RBA's statement of monetary policy, US labor market data, and China's trade data. These events are significant and traders are likely to be cautious ahead of their release.
The energy sector is in focus today due to the ongoing downward slide in oil markets. This relentless decline continues to draw attention from investors and traders alike.
Investors are watching for significant technical resistance for Rio's stock between $55 and $55.50. This range could cap further gains despite the recent rally.
For further commentary from CMC Markets, you can call them at 02 8221 2137 for more insights and analysis.
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