Soggy Start
Trading in local shares is likely to kick off cautiously today in holiday affected trading, ahead of busy week for global economic data. Pressure on commodities prices could add to the weight on the Australian index, although the key question for the session revolves around the potential for last Thursday’s trouncing of bank shares to continue.
Month end brings regular reads from the most globally important economies. Japan gets the ball rolling today with retail sales and employment numbers. While the action continues all week, markets are unlikely to get carried away ahead of Friday’s China manufacturing PMI and US non-farm payrolls.
Heavy selling that wiped around $15 billion from the market value of the big four banks last Thursday is difficult to reconcile with the announcements that apparently sparked it. ANZ and Westpac collectively lifted provisioning for this half year by $125 million.
Despite the clucking of market Chicken Littles, a precautionary sell down of more than one hundred times the value of announced losses is an economic absurdity. It’s much more likely that index selling added to modest sectoral pressure in thin Easter trading on Thursday, and a significant bounce today could confound the early negative indications.
Frequently Asked Questions about this Article…
Trading in local shares is expected to start cautiously due to holiday-affected trading and a busy week ahead for global economic data. Investors are likely to be cautious as they await key economic indicators from major economies.
Pressure on commodity prices could weigh down the Australian index, as commodities are a significant part of the Australian economy. Investors are keeping an eye on these prices as they can influence market performance.
Last Thursday's sell-off in bank shares wiped around $15 billion from the market value of the big four banks. This significant drop was difficult to reconcile with the announcements that triggered it, suggesting other factors like index selling in thin trading conditions may have contributed.
Investors are watching several key economic data releases this week, including Japan's retail sales and employment numbers, China's manufacturing PMI, and the US non-farm payrolls. These indicators are crucial for assessing global economic health.
ANZ and Westpac collectively increased their provisioning by $125 million this half year. This move is likely a precautionary measure to cover potential future losses, reflecting a cautious approach in uncertain economic times.
China's manufacturing PMI and US non-farm payrolls are significant because they provide insights into the economic health of two of the world's largest economies. These indicators can influence global market sentiment and investment decisions.
Yes, there could be a market bounce after last week's sell-off. The heavy selling in bank shares may have been exaggerated by thin trading conditions, and a significant rebound could occur if market sentiment improves.
The heavy selling of bank shares last Thursday was likely influenced by a combination of increased provisioning by ANZ and Westpac, index selling, and thin Easter trading conditions. These factors together created a larger-than-expected market reaction.
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