Strong markets to support Australian shares
Overnight, traders and investors read weak European data as further confirmation of ECB stimulus, driving continental shares higher. Similarly, US markets ignored anaemic retail sales to send markets higher on good corporate reports. Throw in a rally in oil and copper, and Australian shares are set to recoup yesterday’s lost ground.
Sentiment was boosted by news of IMF funding for the Ukraine, and conciliatory statements from Greek and German policymakers. A smooth passage for the re-financing of Greek debt that matures at the end of the month would remove a key global market risk. Optimism is rising that a deal will be reached, despite reports of Athens knocking back a proposal agreed by its own Finance Minister. Grexit negotiations are set to dominate market moves next week.
Locally, analysts receive a brief reprieve from this week’s avalanche of company reports. This morning Sims Metal and Automotive Holdings have beaten estimates. Newcrest Mining is the only other top 200 report today. The sugar hit of lower rates combined with solid reporting from majors such as CBA and Telstra this week should see shares firmly in positive territory today.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
European markets are influencing Australian shares positively as weak European data suggests further ECB stimulus, which has driven continental shares higher. This optimism is spilling over into Australian markets.
US markets are contributing to the positive performance of Australian shares by ignoring weak retail sales and focusing on strong corporate reports, which has helped boost market sentiment globally.
Rallies in commodity prices, such as oil and copper, are beneficial for Australian shares as they help recoup previous losses and support market growth, given Australia's significant resource sector.
The IMF funding for Ukraine has boosted global market sentiment by reducing geopolitical risks and providing stability, which in turn supports the performance of Australian shares.
Greek debt negotiations are crucial as they represent a significant global market risk. A smooth refinancing deal would alleviate concerns and support market stability, benefiting investors worldwide.
Recent reports from companies like Sims Metal and Automotive Holdings, which have beaten estimates, along with solid performances from major companies like CBA and Telstra, have positively influenced Australian shares.
Lower interest rates provide a 'sugar hit' to the Australian stock market by making borrowing cheaper and encouraging investment, which can lead to higher share prices.
For more insights on current market trends, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
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