Solid start as traders waits on data
Higher overnight commodity prices and support for the resources sector has got the market off to a solid start despite caution over today’s data releases.
The reserve ratio cut for China’s banks is unlikely to impact investor thinking. China’s reserve ratios are relatively high. Despite concerns over credit, Chinese authorities appear to be part way through an ongoing plan to progressively reduce bank reserve ratios to support economic growth. The latest move is another step in this process.
Early trading is likely to be cautious as traders wait on the large number of economic data releases due today. A nice jump in the AIG manufacturing PMI got things off to a good start. Australia’s positive PMI reinforces a pattern where manufacturing in countries with relatively weak currencies like Europe and Australia are doing well at the expense of those with stronger currencies like the US and China.
Building approvals and net export data will provide important insight into the Australian economy later this morning. Trend building approvals have been showing signs of plateauing. If continued this trend may help alleviate concerns over a looming apartment glut but will create a headwind for the economy via its impact on construction and manufacturing.
Frequently Asked Questions about this Article…
Higher overnight commodity prices have given the market a solid start, particularly benefiting the resources sector. This positive momentum is helping offset caution surrounding upcoming economic data releases.
The recent reserve ratio cut for China's banks is unlikely to significantly impact investor sentiment. Although China's reserve ratios are relatively high, this move is part of a broader plan to gradually reduce them to support economic growth.
Traders are exercising caution due to the anticipation of a large number of economic data releases today. While the market has started strong, these data points could influence future market movements.
The AIG manufacturing PMI showed a positive jump, indicating that Australia's manufacturing sector is performing well. This trend is consistent with other countries that have relatively weak currencies, like Europe, benefiting from stronger manufacturing performance.
Building approvals data, which has been showing signs of plateauing, could impact the Australian economy by alleviating concerns over an apartment glut. However, it may also create economic headwinds by affecting construction and manufacturing sectors.
Countries with relatively weak currencies, such as Australia and those in Europe, are seeing stronger manufacturing performance. This is often at the expense of countries with stronger currencies, like the US and China.
Net export data provides crucial insights into the health of the Australian economy. It helps investors understand trade balances and the potential impact on economic growth, influencing investment decisions.
A plateau in building approvals could help ease fears of an apartment oversupply, but it might also slow down economic growth by impacting the construction and manufacturing industries, which are key economic drivers.
Call 1300 880 160
Start a chat
Schedule a call
