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Year-end drift for the ASX 200?

The jury is out on whether the ASX 200 rally that began last Thursday is the beginning of a year-end burst to the upside, or another blip in the drifting mode that has beset the index since it peaked on 9 November. 

It's not too late for a year-end rally to get underway. The final lift off in the 2014 and 2016 versions began on 17 and 19 December respectively.

Chart followers will want to see the index clear initial resistance at 6031 to provide evidence that the recent rally is establishing more conviction. Today may not be the day for this to occur. Despite new highs in the US market and a stronger iron ore price, traders will be cautious ahead of the upcoming US inflation data and Federal Reserve meeting.

There is potential for ongoing index-related buying of retail property stocks over coming days as investors seek to maintain their weighting to the sector on the assumption the sale of Westfield will proceed. ANZ also attracted steady buying yesterday with investors anticipating a share buyback following sale of its life insurance business.

The Aussie dollar looked to be another beneficiary of yesterday’s merger and acquisition announcements on the stock exchange. Both the Westfield and ANZ deals involve the purchase of major Australian assets by international buyers, potentially accounting for last night’s jump in the Aussie. 

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