Investors contemplate soft commodity prices and solid department store sales

With little fresh macro news over the past couple of days, the share market looks set for a steady open this morning.

The ASX 200 managed to eke out a positive trading session in similar circumstances on Friday as bargain hunting in major bank stocks continued. A similar dynamic is possible today. However, last week’s steep gains may be pushing bank stocks into the territory where buyers start to become more cautious, at least temporarily.

The materials and energy sectors were a drag on the US market on Friday and we are likely to see negative sentiment towards these sectors on the local market today. The combination of weaker overnight commodity prices with a stronger Australian dollar is unlikely to motivate buying interest for resource stocks today.

The fact that both Myer and David Jones unveiled solid quarterly sales results last week is another positive sign for the consumer discretionary sector. While both results were assisted by stock clearance drives, they are consistent with the sort of grinding improvement typical of post-GFC recoveries. Some improvement in department store sales fits with recent improvements in consumer sentiment indices and solid trend growth in the job market.