Mooted tax cuts spurred US shares to new highs overnight, setting the scene for the Australia 200 index to once again test the 6,000 mark. However pressure on metals, and oil’s failure to climb after OPEC agreed to further production cuts suggest a lack of enthusiasm and a likely cap on trading today.
Corrective action across the Asia Pacific region yesterday means the spring back today may be exaggerated. The Hang Seng below 30,000 and the Nikkei below 23,000 may prove too attractive, especially given the rally in USD/JPY. Japanese PMIs, jobless data and inflation numbers are likely to determine the close. In China the release of the Caixin manufacturing PMI will draw additional attention after yesterday’s stronger than expected read of the official PMI.
Banks remain the most important market swing factor. Further selling after yesterday’s announcement of a Royal Commission into the sector would cruel any initial enthusiasm. Pressure on precious metals and industrial commodities may see Materials stocks disappoint today. The AGM season is winding down with only Premier Investments facing shareholders today. Speculation that Chair Mr Lew may respond to an invitation issued by the outgoing Myer chair will ensure investor attention.