In a welcome reversal of recent weeks, the Australian stock market is showing signs of outperforming US markets today as selling momentum in US Info tech stocks gathered pace with profit takers scrambling to protect gains after a long running rally
Today, the ASX 200 index is benefiting from its low weighting in the tech sector with some of the beaten up “old” sectors like banks and energy stocks leading it higher.
Investors are looking for value in energy stocks with the oil price showing signs of forming a base in the mid-$40 range. West Texas is forming a base out of the over sold zone at the 78.6% Fibonacci retracement level. This is neatly symmetrical with the May peak out of the over bought zone at the 78.6% retracement rally. Glencore’s bid for Rio’s Hunter Valley coal stocks is also a reminder that existing mines are likely to have a place in the energy spectrum for a long while yet.
Aussie Dollar traders will focus on the NAB Business Conditions Index this morning in a big news week for currency traders. Another solid read in business conditions will consolidate a picture of a relatively healthy environment for many industries outside the retail sector. That would be positive for the trend employment outlook leading into Thursdays’ jobs data and help consolidate recent gains by the Aussie Dollar.