A soft overnight lead from US markets has seen a nervous start by the Australia 200 this morning.
Rotation between industry sectors and national markets is a dominant theme for equity markets in a broadly neutral macro setting at the moment. Last night, selling of high value US tech stocks was a notable feature of markets while locally, bank stocks are one of the few sectors to have attracted any support.
There is a degree of irony, in Aussie banks outperforming US tech stocks this morning given yesterday’s news that Apple has moved to protect its turf by disallowing the use of Westpac’s Keyboard to facilitate smartphone payments. The risk of technology disruption is a significant issue for banks. The ability, or otherwise, to use third party applications may be important to banks’ ability to withstand external competition for payments services
This morning’s price action makes for a nervous time for those with a short term bullish outlook on the Australia 200. The index is again trending down, making lower lows and highs. At this stage, a temporary wobble would not be inconsistent with a more bullish outlook. However, to maintain a positive outlook the index would need to form a base at or above the 78.6% Fibonacci retracement and previous lows around 5658/5678
Last night’s news of weaker than expected durable goods orders in the US adds to an impression that the US economy’s pull out of a weak 1st quarter will be moderate. This is supporting the case for a weaker $US.
Against that background, Friday’s data on US personal consumption could be a key number for the outlook on 2nd quarter growth and $US. This week’s US oil data and the question of whether the oil price can form a base around current levels will also be important for thinking on the inflation outlook and $US.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.