Stars align
Rising share prices, rising commodity prices, and the AUD creeping higher, all point to strong support for Australian shares today. The quarterly futures expiry will add extraordinary liquidity, and combined with the overnight impulse could see a heavily traded surge higher. However, the key market event remains the US Federal Reserve’s interest rate decision due early tomorrow morning, and investors may curb their enthusiasm ahead of the call.
Strong disagreement over potential Fed action is at the heart of recent volatility. The longer term focus of the Fed could see it look through recent market moves, although consensus is against a lift at this meeting. An increased risk premium on shares and a USD that has already appreciated significantly may give voting board members confidence that markets are prepared for an increase. Any hike is likely to be accompanied by very soothing words about the gradual nature of the interest rate normalisation.
Strong commodity prices and positive currency moves suggest significant additions to yesterday’s rises. The week so far is dominated by index trading – this may change today as the switch from the September to December futures contract is complete. Energy and finance stock are likely to lead again. A takeover bid for SABMiller announced overnight could re-inforce M&A speculation, and bring further support for media and food stocks today.
Frequently Asked Questions about this Article…
Australian shares are experiencing strong support due to rising share prices, increasing commodity prices, and the Australian dollar (AUD) moving higher. These factors, combined with extraordinary liquidity from the quarterly futures expiry, are contributing to a potential surge in the market.
The US Federal Reserve's interest rate decision is a key market event that can significantly impact investor sentiment. While there is strong disagreement over potential Fed action, any decision to hike rates is likely to be accompanied by assurances of gradual interest rate normalization, which can influence market volatility and investor strategies.
Strong commodity prices are contributing to the positive market environment by suggesting significant additions to recent market rises. This is particularly beneficial for sectors like energy and finance, which are likely to lead the market gains.
Recent market volatility is largely due to strong disagreement over potential actions by the US Federal Reserve. The uncertainty surrounding interest rate decisions and their impact on the market is causing fluctuations in investor sentiment and market movements.
The quarterly futures expiry adds extraordinary liquidity to the market, which can lead to heavily traded surges. This increased liquidity can create opportunities for investors to capitalize on market movements and adjust their portfolios accordingly.
A takeover bid for SABMiller could reinforce speculation around mergers and acquisitions (M&A), providing further support for media and food stocks. Such corporate actions can influence investor confidence and drive market activity in related sectors.
Energy and finance stocks are expected to lead the market gains today, driven by strong commodity prices and positive currency movements. These sectors are likely to benefit from the current market conditions and investor interest.
The switch from September to December futures contracts may change the focus from index trading to more specific stock movements. This transition can impact market dynamics and provide new opportunities for investors to adjust their strategies based on the evolving market landscape.
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