Bargain hunters appear to be testing sentiment as the market opens this morning, concerned that recent selling may dry up.
Investors are facing a trade-off between macro themes. The limited US market reaction to increased certainty of a December rate hike is encouraging. US stock markets consolidated last night as investors continued to focus on a better than expected earnings season and ongoing prospects for domestic economic growth.
On the other hand, concerns about China and weaker commodity prices appear to have been the dominant negative for market sentiment in recent days. This has been fuelled by worse than expected trade and inflation data as well as concerns that the Fed rate hike will increase pressure for capital flows from emerging markets. Against this background, China’s industrial production and retail sales figures due for release after the market closes at 4.30pm have the potential to reset the tone for near term market sentiment.
Westpac will trade ex-dividend this morning, which will strip 12 points from the ASX 200 index from the open, preventing what would otherwise have been small gains for the wider market on the open.