Volatility has traders alert to all possibilities
Bank sellers are back in action in early trade today offsetting buying in materials and energy stocks to push the ASX 200 index lower.
This follows on from yesterday’s market action, where despite a generally firm tone to international equity markets our market was sold off with major bank stocks finishing on their low as sellers took charge. Whether this selling in major bank stocks extends after this morning’s soft opening or whether buyers step in to take advantage of this counter trend move could be the key today’s overall market direction.
Tonight’s US Non-Farm Payroll report may dictate some trader caution today. The major risk appears to be if the outcome is a strong jobs number. Given that the Fed is comfortable with the broad trend of job growth, a strong number would improve the atmosphere for a September rate hike. Conversely it would take a really weak report and/or significant downward revisions to past data to create a situation where the labour market became a barrier to the Fed making its first move this year.
Mario Draghi’s comments last night were taken by markets as affirmation that the ECB has a clear easing bias. This provides a counterpoint to the Fed’s tightening bias and led to Euro Dollar weakness. The Aussie Dollar however, is managing to cling to the 70c zone at this stage helped by stronger commodity prices last night
Frequently Asked Questions about this Article…
Bank stocks are impacting the ASX 200 index because sellers are actively trading these stocks, which is offsetting the buying in materials and energy sectors, leading to a lower index.
The market direction today could be influenced by whether the selling in major bank stocks continues or if buyers step in to take advantage of the current trend. Additionally, the US Non-Farm Payroll report might also play a role in trader caution.
A strong US Non-Farm Payroll report could improve the atmosphere for a potential September rate hike by the Fed, while a weak report might create uncertainty about the Fed's next move.
Mario Draghi's comments were seen as confirmation of the ECB's easing bias, which contrasts with the Fed's tightening stance, leading to Euro Dollar weakness and influencing market dynamics.
Stronger commodity prices are helping the Australian Dollar maintain its position around the 70c mark, despite other market pressures.
The major risk with the US jobs report is that a strong jobs number could lead to a September rate hike by the Fed, while a weak report might delay such a decision.
Traders are cautious ahead of the US Non-Farm Payroll report because its outcome could significantly influence the Fed's decision on interest rates, impacting market sentiment.
International equity markets set a generally firm tone, but local factors like bank stock selling are currently having a more direct impact on the ASX 200 index.
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