As the ASX 200 index approaches the top of its trading range, investors will be considering conflicting influences
Bank of Queensland has kicked off the reporting season with a solid result that should encourage investors in the sector. The result features an improved interest margin, reduced loan impairment expenses and a special dividend.
On the other hand, the major mining stocks continue to face a nervous short term outlook as the spot iron ore price slips into the $50’s with no sign that it’s about to consolidate yet.
The Fed has kicked the can down the road, with the latest minutes indicating it’s likely to lift rates in December but leave a decision on the pace of future tightening until next year. Inflation will clearly be the key issue for the Fed next year. Until core inflation begins to pick up, there is a bias towards the possibility that the Fed rate will rise more slowly and to a lower neutral rate than current projections imply. However, there are other complicating factors including changes to the FOMC personnel next year and the extent, if any, of government fiscal stimulus.
Traders will have a watching brief on the situation in Spain over coming days. However, consistent with the markets’ recent stance on geopolitical risk, there is unlikely to be any reaction unless the situation escalates.