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A contrarian day?

Equity market activity has been characterised by rotation between sectors and markets against a background of a background of steadily firm indices in recent times. This has seen local investors return to the consumer discretionary and Info Tech sectors in recent days.

It’s also a trend that appears to have benefited the overall Australian market this week. After being relatively out of favour for some time, the ASX 200 index has enjoyed a good rally while, with the exception of Japan, other major stock indices have been stalled at higher levels. The question for traders will be whether today another contrarian day is on the cards for the local market. This could see the ASX 200 index push further into the top part of its trading range.

Mining stocks may also be a focus today. Having dropped below $60 the previous day, iron ore markets showed possible signs of basing yesterday. While the spot price made modest gains, Chinese iron ore and steel futures closed higher following news of earlier than anticipated closure of steel mill in Hebei Province. If that continues this afternoon, there’s likely to be some support for the materials sector which was the only one to finish lower yesterday. 

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