Local shares on the edge
After a startling underperformance to start the week, the Australian share market looks vulnerable today as local investors eye a global sell off in bonds, falls in US shares overnight and lower metals’ prices. Futures markets are pointing to a fall of just three points at the open, but this looks very optimistic in light of the pressure on dividend yielding stocks in the financial, telco and consumer staples sectors yesterday.
A failure to resolve the Greek funding crisis is adding to the pressure on local shares. While the rest of the world is now largely economically insulated from Greece, risks remain. Throw in major banks going ex-dividend (Westpac tomorrow, NAB on Friday) and even the most optimistic investor may hold off on any purchases, at least for the short term.
Stand out performances from resource shares have helped offset losses in other sectors over the last week. Today, energy shares may once again provide market ballast. However general metals weakness, despite further iron ore gains, may see miners adding to the weight on the market today. The release of home lending data may provide support if it shows a “quality” pick up in lending to owner occupiers. A surge in investment lending could see a negative response if investors focus on the possibility of an overheated market.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
The Australian share market is looking vulnerable due to a global sell-off in bonds, declines in US shares overnight, and lower metals prices. These factors are putting pressure on dividend-yielding stocks in the financial, telco, and consumer staples sectors.
The Greek funding crisis is adding pressure to local shares, even though the rest of the world is largely economically insulated from Greece. The uncertainty surrounding the crisis is causing investors to be cautious.
Major banks like Westpac and NAB going ex-dividend can lead to a temporary decline in their stock prices, which may cause even optimistic investors to hold off on purchases in the short term.
Resource shares have been performing well and helping to offset losses in other sectors. Energy shares, in particular, may provide market support, although general metals weakness could add pressure.
The release of home lending data could support the market if it shows a quality increase in lending to owner-occupiers. However, a surge in investment lending might lead to concerns about an overheated market, potentially causing a negative response.
Investors might be cautious due to the pressure on dividend-yielding stocks, the unresolved Greek funding crisis, and major banks going ex-dividend. These factors contribute to uncertainty in the market.
The financial, telco, and consumer staples sectors are currently under pressure due to the global sell-off in bonds and declines in US shares, which are affecting dividend-yielding stocks.
Energy shares can provide market support and help offset losses in other sectors. Despite general metals weakness, gains in energy shares may act as a stabilizing factor for the market.
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