Selling slows as commodities warn
European and US shares traded under pressure for the second session in a row overnight as post Grexit increases were further trimmed. Bonds are the major beneficiary, rallying across the board, while US shares continued to retreat despite some upbeat company results and a positive surprise on existing home sales. Commodity markets are sounding a warning to share markets, with ongoing falls in energy and industrial metals pointing to a deteriorating demand outlook.
Currency markets may give the lead to today’s share market action. The RBNZ cut interest rates this morning, yet the NZD defied expectations and rose. The perception that commodity currencies may be near lows could attract regional investment in Australian shares today. Futures markets are pointing to a local fall of only two points at the open, in contrast to other Asia Pacific bourses.
Caution is a likely byword for trading today. Copper and oil remain under significant pressure, reflecting worries about the outlook for industrial demand as well as the potential for strength in the USD. The stronger USD is also expected to influence today’s trade data from Japan, with analysts looking for a 10% lift in exports in June. Today’s question for day traders is how much of the overnight weakness was anticipated by yesterday’s regional plunge?
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
European and US shares have been under pressure due to post-Grexit increases being trimmed and ongoing concerns in the commodity markets, which are signaling a deteriorating demand outlook.
Bonds are performing well, rallying across the board as investors seek safer assets amidst the pressure on share markets.
Commodity markets are warning share markets of potential trouble, with ongoing falls in energy and industrial metals indicating a weakening demand outlook.
The NZD rose because there is a perception that commodity currencies may be near their lows, which could attract regional investment, particularly in Australian shares.
Copper and oil prices remain under significant pressure due to concerns about industrial demand and the potential for a stronger USD.
A stronger USD is expected to influence Japan's trade data, with analysts anticipating a 10% lift in exports for June.
Day traders should consider how much of the overnight weakness was anticipated by the previous day's regional plunge, as caution is likely to dominate trading today.
For further commentary on the current market situation, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
Call 1300 880 160
Start a chat
Schedule a call
