A relatively quiet day’s trading today will do nothing to harm hopes that the ASX 200 index can again consolidate at or around the 5600 level which has consistently attracted bargain hunting support this year.
It would not surprise if firm metals price see some support for the materials sector today with recent lower prices for mining stocks beginning to look more attractive against a background of a steady outlook for global demand growth. The recent improvement in the spot iron ore price is a minor relief. However it would take a break above chart resistance at around $60 to indicate markets were having a major rethink on the threat posed by forecast supply increases.
Market response to yesterday’s news of the South Australian tax on banks will be a key factor for today’s trading session. Shareholders may now be concerned that the Federal and South Australian precedents will be followed by other states. In general terms this serves as a reminder that Australian shareholders generally and bank shareholders in particular, are in a period of heightened political risk that needs to be factored into investment decisions.