Local market rebounds with commodity prices
The ASX200 is enjoying some relief after yesterday's rout, gaining 53 points in morning trade. Buying is heavily concentrated amongst materials and energy stocks, which is to be expected following the welcome bounce in commodity prices.
The ASX200 is enjoying some relief after yesterday’s rout, gaining 53 points in morning trade.
Buying is heavily concentrated amongst materials and energy stocks, which is to be expected following the welcome bounce in commodity prices. Also, given yesterday’s sell off was so savage, it appears some investors are being enticed by the value proposition. However, FMG is a notable anomaly. Despite a steady iron ore price overnight, the stock is going against the grain, shedding around 2% and raising a few eyebrows in the process.
This morning’s monthly building approvals read has come in at an increase of 11.4%, sharply higher than expected. This, along with the growing chorus calling for a rate cut, is driving property stocks higher today.
The current account deficit has also bettered expectations, 12.5 billion vs. 13.5 billion, although market impact was minimal with traders now focussed on the RBA meeting.
Next up is the cash rate and RBA statement at 2:30pm. While the rate will remain steady today, the statement may provide clues to the RBA’s bias. As mentioned above, there is growing expectation that there may be one more rate cut left in the cycle, fuelled by Deputy Governor Lowe’s recent comments.
The Aussie dollar is likely to be most sensitive to the statement. Although, given its recent plight and the increasing rate cut chatter, the risk may be to the upside. It’s currently trading around 0.8483 USD.For further comment from CMC Markets please call 02 8221 2135.