Positive mood returns
A healthy start to Friday morning’s market looks assured driven by a number of positive factors.
One is the news of ongoing moderate inflation in the US. This validates the Fed’s cautious attitude to tightening monetary policy making it unlikely that the Fed rate will be much higher than 1.5% by the end of next year. The likelihood of a very modest approach to monetary tightening in the medium term poses few threats to equity valuations at this stage.
Friday's market may also benefit from some rebound effect following Thursday's underperformance by the Australian market. This was possibly related to the expiry of futures and options positions. In that context, traders will be watching for signs of any resumption in the buying in banks and other yield stocks that began earlier in the week.
Despite these positive factors, it’s likely that looming deadlines in the Greek debt crisis will sound a note of caution and cap market exuberance today. Today’s trading looks likely to remain inside yesterday’s range on the ASX 200. From a chart point of view this would leave today’s trading as a neutral, indecisive day but with the short term downtrend intact and the index struggling at the resistance of its 200 day moving average at around 5584.
Gold stocks may be a feature of today’s trading. The precious metal rallied to sit just below its 200n day moving average at $1206 as traders reacted to concerns about Greece combined with the positive impetus of the weaker $US.
For further comment from CMC Markets please call 02 8221 2137.
Frequently Asked Questions about this Article…
The positive market mood this Friday is driven by ongoing moderate inflation in the US, which supports the Fed's cautious approach to monetary policy. Additionally, a rebound effect from Thursday's underperformance in the Australian market is expected to contribute to the positive sentiment.
The US Federal Reserve's cautious approach to monetary policy, with rates unlikely to exceed 1.5% by the end of next year, poses few threats to equity valuations. This moderate stance is seen as supportive for the stock market.
The Australian market might see a rebound effect today due to Thursday's underperformance, which was possibly related to the expiry of futures and options positions. Traders are watching for a resumption in buying of banks and other yield stocks.
The looming deadlines in the Greek debt crisis are likely to introduce caution into today's market trading, potentially capping market exuberance and keeping trading within yesterday's range on the ASX 200.
The ASX 200's 200-day moving average, around 5584, acts as a resistance level. Today's trading is expected to remain neutral and indecisive, with the index struggling at this resistance point, maintaining the short-term downtrend.
Gold stocks may be prominent in today's trading as the precious metal has rallied to just below its 200-day moving average at $1206. This rally is driven by concerns about Greece and the positive impact of a weaker US dollar.
A weaker US dollar typically boosts gold prices as it makes the precious metal cheaper for holders of other currencies, leading to increased demand and a rally in gold stocks.
Traders should watch for signs of resumption in buying of banks and other yield stocks, which began earlier in the week. This could indicate a positive trend in these sectors despite the overall market caution.
Call 1300 880 160
Start a chat
Schedule a call
