Market consolidates
There was nothing in overnight market news likely to change the outlook for Australian investors this morning. This suggests that while the market may open on a firm note, the most likely scenario for today’s trading is another day of consolidation. In the last two days, the ASX 200 index has traded inside last Tuesday’s range and seems likely to remain there today. A potential assault on the 6000 high will be left to next week.
Jaded resource investors will be relieved that both iron ore and oil managed to hold the line in the latest trading session. However, large supply surpluses overhang both these markets and the risk of further price pressure remains front of mind for potential buyers.
China’s inflation data is expected to show the ongoing impact of oversupply in its property market and heavy manufacturing sector. While in the big picture, the inflation rate remains well below the official target rate, markets are still likely to be sensitive to small deviations from expectations in today’ s figure. A slightly better than expected number would build on a similar outcome last month and would be seen as evidence that the risk of low price growth is starting to be contained. However, a lower than expected outcome could add to ongoing market concerns about the medium term growth outlook for China’s economy.
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Frequently Asked Questions about this Article…
The current outlook for the Australian stock market suggests a day of consolidation, with the ASX 200 index likely to remain within the range it has traded in over the past two days. A potential move towards the 6000 high is expected to be delayed until next week.
Resource investors are somewhat relieved as both iron ore and oil prices have managed to hold steady in the latest trading session. However, there is still concern about large supply surpluses, which could lead to further price pressure.
China's inflation data is closely watched as it reflects the ongoing impact of oversupply in the property and heavy manufacturing sectors. A better-than-expected inflation figure could indicate that low price growth risks are being contained, while a lower-than-expected figure might raise concerns about China's medium-term economic growth.
The ASX 200 index is not expected to break the 6000 high this week due to the current market consolidation. Investors are likely waiting for more significant market news or data before making moves that could push the index higher.
The current oversupply in the resource markets, particularly in iron ore and oil, poses a risk of further price pressure. This oversupply could lead to decreased prices, affecting investor confidence and market stability.
Small deviations in China's inflation data can significantly impact the market, as they may alter perceptions of economic stability and growth prospects. A slightly better-than-expected figure could boost confidence, while a lower figure might heighten concerns about economic growth.
Investors should watch for any significant market news or economic data that could influence the ASX 200 index's movement. A potential assault on the 6000 high is anticipated for next week, depending on market conditions.
Investors can stay informed about market changes and expert commentary by following updates from financial news sources and market analysts. For specific insights, they can contact CMC Markets at 02 8221 2137 for further comment.
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