The news is not bad enough
With the speculation about central bank actions the current key driver of market performance, overnight data releases were not bad enough to spur further buying. US and European markets eased back from recent highs as oil prices slid to new six year lows.
US housing data showed worse than expected activity, as February starts slumped 17%. However the leading building permits component surprised to the upside, increasing by 3% and to some extent offset the weakness. Traders were nonplussed, and instead focussed on new lows for oil prices. US materials and energy stocks were belted. More surprisingly, the possible positive effects of lower petrol prices were also ignored in a sell off of both the consumer staples and discretionary sectors.
Futures markets are indicating Asia Pacific indices may once again march to their own beat, with most pointing to a neutral start despite the negative leads. House price data in China today speaks directly to concerns about lending exposures and potential policy responses, and could push sentiment either way. Locally, yesterday’s market leading performance from Energy stocks will likely be reversed, pushing the Australia 200 index in to the red initially.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.