Sentiment Rules

The Australian share market is likely to hit its lowest level since mid-2013 due to global sentiment overshadowing positive data from China. Despite better-than-expected numbers, European and US traders have ignored these signs, leading to a downturn in the market.

Commodity markets initially saw early gains but reversed course, adding pressure to trading and ending a short-term rally in energy shares. This pattern was seen with copper and oil, which rallied early but slipped into the red during the US session.

China's export numbers for December exceeded bearish expectations, suggesting a stronger economy than anticipated. However, this positive data had little impact on global investor sentiment, which remained largely unaffected.

Australian employment data is expected to show a pullback from the significant gain of over 71,000 jobs in November. The consensus is a loss of 10,000 jobs in December, reflecting a cautious outlook among investors.

Investors appear to be driven more by sentiment than data. Even when economic indicators, like China's export numbers, are positive, they are often overshadowed by prevailing market sentiment, leading to a lack of response from investors.

Sentiment plays a dominant role in the current market environment, often taking precedence over actual data. This means that even positive economic indicators can be overlooked if the overall market sentiment is negative.

The Asia Pacific markets initially reacted positively to China's economic data, with an early rally. However, this optimism was short-lived as the better outlook was quickly abandoned in European trading sessions.

Investors tend to sell off when Australian job numbers are poor, but they remain skeptical even when the numbers are good. This reflects a cautious approach driven by sentiment rather than data.