As the US earnings season approaches the midpoint, better than expected earnings again saw US indices hit all-time highs overnight. Apple’s after market report also outstripped forecasts, and combined with a lift in precious metals should see further support for Australian shares today. The Australia 200 index is set to test the increasingly important 6,000 level, and success or failure at this peak today could set the short term direction for the market.
One of the keys to breaking to new post-GFC highs is the finance sector. A “backfoot” buying approach to bank shares may see investors step away, awaiting another price dip. It will be difficult for the index to maintain higher levels without the more gains in the sector that now comprises almost 50% of the index value.
Modest falls in energy prices overnight may see the sector relinquish its recent market leadership.
Traders are focused on the telco sector as arbitragers sell the acquirers TPG and M2 and buy the target iiNet. Investors may turn to this morning’s weekly read on consumer confidence and the leading index released later in the session. Recent eye-catching rallies in Hong Kong and Shanghai may once again dominate the regional performance
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.