Investors have apparently decided that Australian consumers may not be quite as fazed by high debt and low wage growth as feared. Solid buying of consumer discretionary stocks led the second day of a recovery in the ASX 200 index yesterday that sees it comfortably back in the middle to upper part of its trading range.

Support for Telstra and consumer discretionary stocks yesterday, continued the pattern of recent months where buyers ultimately support the index, seeking value in sectors that have been sold off.

The question for mining stocks today may be whether they suffer from the flip side of the sector rotation theme. Rio Tinto which has been a strong outperformer recently and buoyed by the return of large amounts of cash to shareholders, showed signs of faltering at chart resistance yesterday. Another day of weaker spot iron ore prices in China, could see Rio’s share price begin to fall away from this resistance.

Gold stocks on the other hand could be supported as the gold price continues to recover from the key 61.8% Fibonacci retracement level. 

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.