Misleading Leads

After a night of weak trading in shares local futures markets are indicating falls at the opening for most Asia Pacific markets. However, USD weakness has once again boosted commodity prices and may see support for Australian stocks despite a higher AUD.

After a night of weak trading in shares local futures markets are indicating falls at the opening for most Asia Pacific markets. However, USD weakness has once again boosted commodity prices and may see support for Australian stocks despite a higher AUD.

US Fed vice chairman Fisher commented that a gradual rise in rates was not a given, and that a cut may follow the first rate rise. The USD fell against most currencies. Explosive gains for copper and a lift in oil prices despite bearish commentary from OPEC officials mean the commodity based Brazilian real, South African rand and Australian dollar lead the rises. This in turn should lead to support for energy and mining shares today, with the potential to push the Australian share market into the green.

China bears are expecting a weakening in the flash manufacturing PMI due around mid-session. While this would still leave it in expansionary territory, it represents a further positive risk for traders if there is a post new year holiday bounce back. Further supporting a swing to positive sentiment is a gain in the weekly consumer confidence reading released this morning.

For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.

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