Local and/or General
Overnight market action was dominated by a response to Chinese GDP, retail sales and industrial production numbers released yesterday.
A clear collective conclusion is that the stronger than expected numbers remove an impediment to US rate rises, following the Fed’s statement that explicitly identified international weakness as a reason to hold off lifting rates in September. This led to a stronger USD, weaker commodity prices and modest gains for shares as markets weighed a better global growth scenario against potentially tighter US monetary policy.
SPI futures are pointing to a flat start for Australian shares. However, local factors could dominate trading. The announcement this morning of proposed legislative changes in response to the Murray inquiry into the financial system will directly impact sectors and stocks today.
Further increases to capital requirements, higher compliance and training standards for financial planners and facilitation of crowdsourcing could all hit bank share prices today. Changes to default superannuation funds could see support for listed fund managers, but the new restrictions on transaction charges could see Cabcharge shares trounced.
In further company news, Cochlear holds its AGM today, but investors are more likely focussed on BHP’s quarterly sales and production report due before market tomorrow.
Frequently Asked Questions about this Article…
Stronger than expected Chinese GDP, retail sales, and industrial production numbers can influence US interest rates by removing concerns about international economic weakness. This can lead to a stronger USD and potentially tighter US monetary policy as the Federal Reserve may feel more confident in raising rates.
When US interest rates are expected to rise, it often leads to a stronger USD. A stronger dollar can result in weaker commodity prices because commodities are typically priced in USD, making them more expensive for foreign buyers.
Proposed legislative changes could impact Australian banks by increasing capital requirements and raising compliance and training standards for financial planners. These changes might lead to a decrease in bank share prices as they adjust to the new regulations.
Changes to default superannuation funds could provide support for listed fund managers. This is because the adjustments might lead to increased competition and opportunities for fund managers to attract more investments.
Cabcharge shares could be negatively impacted by new restrictions on transaction charges because these changes might reduce the company's revenue from transaction fees, leading to a potential decrease in share value.
While Cochlear's AGM is important, investors might be more focused on BHP's upcoming quarterly sales and production report, as it could provide significant insights into the company's performance and future prospects.
SPI futures can indicate the expected opening direction of the Australian share market. A flat start suggested by SPI futures means that local factors, such as legislative changes, could play a more significant role in determining market movements.
A stronger USD can lead to weaker commodity prices and modest gains for shares as markets balance the prospects of better global growth against the potential for tighter US monetary policy. This dynamic can influence investment decisions and market trends worldwide.
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