Quiet market day with some downside risk
Today looks like being a Friday consolidation for the stock market as traders head into the weekend with little in the way of news scheduled for the Asian region.
Commodity markets were a mixed bag. Solid gains in base metals like copper were offset by a small dip in yesterday’s spot iron ore price. Wednesday night’s strong upward momentum in US oil prices has also not followed through at this stage. Following the initial surge after a break through chart resistance, the oil market put in a much more subdued performance last night, eking out moderate gains. The net effect is likely to be relatively neutral for the overall materials sector today. However the potential for selling to develop due to disappointment over loss of momentum in the key iron ore and oil markets is a risk on the day.
Currency markets are front of mind for traders at the moment. US housing starts continued the run of soft data relating to overall performance of the US economy in March. Traders are coming increasingly to the view that Fed interest rate hikes are likely to be delayed and more gradual than previously forecast. This is beginning to put downward pressure on the $US. At the same time, the Aussie Dollar got an upside surprise yesterday with much stronger than expected jobs data. This combination weaker than expected US data and stronger than expected Australian data has created strong buying in the Aussie Dollar
For further comment from CMC Markets please call 02 8221 2137.
Frequently Asked Questions about this Article…
The stock market is experiencing a Friday consolidation with traders heading into the weekend. There is little news scheduled for the Asian region, which suggests a relatively quiet market day.
Commodity markets are mixed today. While base metals like copper have seen solid gains, there has been a small dip in the spot iron ore price. Additionally, the strong upward momentum in US oil prices from Wednesday night has not continued, resulting in a more subdued performance.
The mixed performance in commodity markets is likely to result in a relatively neutral impact on the overall materials sector. However, there is a risk of selling developing due to disappointment over the loss of momentum in key markets like iron ore and oil.
Currency markets are currently focused on the US and Australian economies. Soft US economic data, particularly in housing starts, is leading traders to believe that Fed interest rate hikes will be delayed and more gradual. This is putting downward pressure on the US Dollar. Conversely, stronger than expected Australian jobs data has led to strong buying in the Aussie Dollar.
The US Dollar is under downward pressure due to a series of soft economic data from the US, including housing starts. This has led traders to anticipate that the Federal Reserve will delay and slow down interest rate hikes, affecting the currency's strength.
The Aussie Dollar has strengthened due to much stronger than expected jobs data from Australia. This positive economic news has led to increased buying interest in the currency.
Investors should be aware of the potential for selling in the market due to disappointment over the loss of momentum in key commodity markets like iron ore and oil. This could pose a downside risk for the day.
For further commentary on the current market situation, you can contact CMC Markets at 02 8221 2137.
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