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Index ballast

The ASX 200 is sinking to the middle of its trading range, weighed down by a falling iron ore price and negative sentiment on the big 4 banks. Early market action gives no indication that the weight of these 2 sectors is about to be removed as a mill stone around the neck of the ASX 200.

Investors may remain nervous about Australian bank stocks until either the APRA report on revised capital requirement is released or prices fall further. Markets will again focus on iron ore and steel prices in China this afternoon against a background of high inventory and expectations of moderating growth in property development.

The Aussie Dollar has succumbed to the magnetic attraction of the $US 0.75 level in what will be a big data day for traders. The return to this resistance level, despite weaker commodity prices overnight, suggests the Aussie may have more scope to respond to negative than positive news with today’s data. This could come in the form of a bigger than expected drag on GDP from net exports or a worse than anticipated current account deficit. 

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