Shell’s exit from the Woodside register proved to be one of the leading catalysts for a bout of profit taking on the Australian stock market. There are reports that investors sold other stock in order to make way for their newly acquired Woodside holding.
After a 7% rally in the ASX 200, selling gathered significant momentum yesterday and looks like continuing on the open this morning thanks to the overnight sell-off in commodities. While the spot iron ore price firmed yesterday, oil and other industrial metals fell. This will put mining and energy stocks under pressure in early trading.
News of a downturn in China’s home sales feeds into the consensus outlook for gradually moderating growth in China. On the other hand, confirmation of really solid GDP growth in Germany and Italy, confirms a picture of synchronised global growth, even if China comes off the boil a little. This synchronised global growth should put a solid floor under commodity demand and ensure that current selling of commodities will be a “pull back”, not a major trend reversal.
Solid, European GDP growth led to a sharp rally in the Euro overnight. Where to from here may depend on whether the US economy can rise to the occasion with good retail sales and CPI data tonight.
Weaker commodity prices have kept the Aussie Dollar subdued against $US and sharply weaker against the Euro. Forex traders as well as investors in retail stocks will focus on this morning’s Wage Price Index. This will feed into the market outlook for inflation, interest rates and consumer spending.
Dulux produced a solid result this morning, marginally ahead of consensus expectations. It is encouraging to see that management is confident in the outlook for the domestic renovation market for the coming year.
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.