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Bargain hunters let loose

The Australian stock market has notably underperformed international markets over the past couple of weeks. The question is whether the selling behind this has finished or will downward momentum in the local banks and other key sectors re-emerge later in the day.

Potential bargain hunters will be all too conscious of the fact that pullbacks have been limited over the past 12 months. Any sign that recent selling has dried up, is likely to see bargain-hunting momentum develop. A strong close with the ASX 200 index moving well clear of yesterday’s high at 6018 would be evidence that the market is back to bargain hunting mode. Early indications are that upward momentum is gathering.

Traders had no time to rest after release of Resmed’s quarterly profit result.  Strong revenue growth and a particularly encouraging lift in sales of Resmed’s cloud based sleep analysis software has produced a sharp jump in the stock this morning.

This morning’s market bounce in Domain Holdings and Fairfax suggests that sellers over did the response to news that Mr. Catalona has resigned as CEO. There no reason to assume that Domain’s Board will not be able to recruit a competent replacement for Mr. Catalona and in the interim, the existing strategy will continue.    

Today’s Bank of Japan meeting will be a key focus for the forex markets. The AUDJPY goes into this meeting testing chart resistance. Any hint that the Bank of Japan might be starting to consider a tapering program for its bond purchases has potential to create a double top in the Aussie against the Yen.

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