The Market Constellation
In a rare alignment of stars all arrows are pointing upward for Australian shares today. European and US share markets rose again, oil leapt 5% and both industrial and precious metals made gains. The resurgence in risk appetites is also lifting the AUD. Futures are pointing to a gain of better than 1% at the open, but today’s trading will likely be shaped by unemployment data and the 18 major companies reporting earnings during the session.
Explanations for the swing to positive moves are weak. While the sell-off that began 2016 was attributed to an ever evolving and chimeric set of concerns, the best explanation for the rally appears to be the universal pessimism. “Bears have no shares”, and therefore little influence on market action. The positive moves are now stirring investors who are too cashed up, and there is a risk of a “melt up” on global markets if fear of missing out takes over from fear of catching a falling knife.
Analysts are expecting a further slight increase of around 10,000 jobs in January. The forecasts have this offset by an increase in participation, to leave the jobless rate unchanged at 5.8%. However, given everybody up to and including the Governor of the RBA have doubts about the numbers, market reactions to a strongly divergent number could be tempered by disbelief. Good pre-market reports from AMP, Investa and GPT could add to investor enthusiasm today, although Telstra’s small earnings miss could see the sector drag on market performance.
Frequently Asked Questions about this Article…
Australian shares are expected to rise today due to positive movements in European and US share markets, a significant increase in oil prices, and gains in both industrial and precious metals. This resurgence in risk appetites is also boosting the Australian dollar.
Today's trading in the Australian market is likely to be influenced by unemployment data and the earnings reports from 18 major companies. These factors could shape investor sentiment and market performance throughout the session.
The current market sentiment, characterized by a resurgence in risk appetites, is stirring investors who are holding too much cash. There is a risk of a 'melt up' in global markets if the fear of missing out overtakes the fear of catching a falling knife.
Analysts are expecting a slight increase of around 10,000 jobs in January. However, this is anticipated to be offset by an increase in participation, leaving the unemployment rate unchanged at 5.8%.
Market reactions to the unemployment data could be tempered by disbelief, especially if the numbers strongly diverge from expectations. Even the Governor of the RBA has expressed doubts about the accuracy of these figures.
Good pre-market reports from companies like AMP, Investa, and GPT are contributing to investor enthusiasm today. However, Telstra's small earnings miss could potentially drag on market performance.
The phrase 'Bears have no shares' suggests that those who are pessimistic about the market (bears) do not hold shares and therefore have little influence on market action. This lack of influence is contributing to the current positive market moves.
If the current market optimism continues, there is a potential risk of a 'melt up' in global markets. This could occur if the fear of missing out becomes more dominant than the fear of catching a falling knife, leading to rapid and unsustainable market gains.
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