Sentiment Rules

The Australian share market is likely to hit its lowest level since mid-2013 after European and US traders ignored better than expected numbers out of China. Commodity markets also reversed early gains, adding weight to trading today and snuffing out the short term rally in energy shares. Australia jobs numbers will bounce around despite a timid consensus of a loss of 10,000 jobs in December.

The Australian share market is likely to hit its lowest level since mid-2013 after European and US traders ignored better than expected numbers out of China. Commodity markets also reversed early gains, adding weight to trading today and snuffing out the short term rally in energy shares. Australia jobs numbers will bounce around despite a timid consensus of a loss of 10,000 jobs in December.

When sentiment rules, data can only play a secondary role. The lift in China exports in December not only smashed bearish expectations of a fall but spoke directly to the idea that the economy in China tanked in Q4 2016. Yet these facts barely dented global investor psyches. After an initial rally in the Asia Pacific time zone, the better outlook was quickly abandoned in Europe. Copper and oil followed the same pattern, rallying early and the slipping into red in the US session.

Australian employment data is expected to show a pullback from the eye-catching November gain of more than 71,000 jobs. Given current sentiment, it seems investors will sell a poor number but doubt a good one.

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