Up by the Numbers
Good data and strong market reactions overnight have Australian shares poised for a jump at today’s opening. Local optimism is further supported by a lower Australian dollar against both the US dollar and the Japanese yen, highlighting the potential for international buyers to push stocks higher. Further falls in commodity prices may temper enthusiasm.
The shift to positive sentiment started with comments from China over the weekend that indicated further central bank stimulus is imminent. However, stronger than expected German inflation and US numbers showing surprise increases in personal income and pending home sales drove buying. Investors were in a “on the one hand, on the other hand” mode, responding positively to good economic news and comforted by the potential for ECB and PBoC action should the scenario sour.
Although commodity prices came under further modest pressure, pre-market indications are for strong gains in miners and energy stocks. These sectors dragged the index lower yesterday, and accounted for an underperformance of the region. Gains here could see Australian shares lead the charge higher, but the falls in the underlying commodities may see them come back to the pack by the end of today’s session.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
Australian shares are expected to rise due to strong market reactions overnight and positive economic data. Additionally, a lower Australian dollar against the US dollar and Japanese yen is attracting international buyers, further boosting optimism.
A lower Australian dollar makes Australian stocks more attractive to international buyers, potentially driving up stock prices as foreign investors take advantage of favorable exchange rates.
Commodity prices can significantly impact the Australian stock market, especially sectors like mining and energy. While falling commodity prices may temper enthusiasm, strong gains in these sectors can lead to overall market growth.
International economic indicators, such as stronger than expected German inflation and US data on personal income and pending home sales, are positively influencing Australian shares by boosting investor confidence and market activity.
Comments from China indicating potential central bank stimulus have shifted investor sentiment positively. The possibility of action from the European Central Bank (ECB) and the People's Bank of China (PBoC) provides comfort to investors, supporting market optimism.
Gains in mining and energy stocks could lead the Australian market higher because these sectors previously dragged the index down. A rebound in these areas can significantly boost overall market performance.
While there is optimism for Australian shares, further falls in commodity prices could temper enthusiasm, as these declines might offset gains in mining and energy stocks by the end of the trading session.
Investors can stay informed about market changes by following expert commentary, such as insights from Michael McCarthy at CMC Markets, and keeping an eye on international economic indicators and central bank announcements.
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