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.