Yesterday’s selling in key markets was halted by a luke warm move off overnight lows. This may translate into a moderate bounce in the ASX 200 when it opens. Traders will then be waiting to see if buying momentum develops or if we follow the US market with a minor and inconclusive move off yesterday’s low.
Overnight commodity markets will not help the cause of those looking for a significant rally to develop. Oil was the exception to last night’s rally. A build in gasoline inventories was enough to see continuation of the selling that has dominated the market since the OPEC meeting. Copper staged only a minor rally after the previous day’s high momentum selling. This is likely to leave traders cautious about resource stocks today.
In what might be a constructive development, Commonwealth bank shares bounced off trend line support yesterday. The bounce lacked momentum and is far from conclusive at this stage. However, if bargain hunters start pushing banks higher again today this trend could develop, providing support for the index today