Despite relatively steady US markets, Australian markets have opened on the back foot. Not only is the ASX 200 weaker but the Aussie Dollar has slipped below late October support. It’s possible that investors are coming to the view that the current political uncertainty warrants some risk premium.
Market dynamics are also coming into play this morning. The ASX 200 has enjoyed an unbroken up trend since early October resulting in a 7% rally. This made it likely that the first meaningful signs of a downturn would galvanise profit takers into action
Energy stocks are also responding to market dynamics. Both energy stocks and oil have enjoyed a strong rally. Now that the oil uptrend is pausing, traders have clearly decided that discretion is the better part of valour when it comes to energy stocks.
Traders will be focussed on Chinese economic data today. This comes against a background of recent moderation in growth. The timing of this data gives it potential to either stop the rot on Australian markets or fuel this morning’s sell-off. China’s industrial production is expected to soften, given recent moderation in export orders. However, as the economy rebalances towards domestic demand, markets are paying increased attention to retail sales. These are expected to have continued September’s solid growth.
In a case of sell the rumour, buy the fact; major Australian retail stocks have staged a minor recovery recently despite reports of Amazon’s imminent opening. However, press reports that Amazon will hit the ground running with a simultaneous opening of both its Marketplace and first party sales, may give investors pause for concern.