Selling dried up on international markets last night and this is likely to translate into a relatively steady open for the ASX 200 this morning.
While investors will be relieved that yesterday’s selling looks unlikely to be repeated today, it’s too early to assume yesterday was a one day wonder. Markets have clearly decided that the US political situation has the potential knock stock valuations off their relatively high perch. The size of yesterday’s downward move and the clear break through index support levels, suggest that more evidence will be required to conclude that last night’s market action is any more than a wait and see pause.
Yesterday’s solid jobs data is an encouraging sign for the Australian economy. While the April data was skewed towards part time jobs, trend growth in full time jobs remains solid and confirms good readings in business conditions indices over recent months. This trend is encouraging for the consumption outlook in the economy and joins trade as a bright spot on the Australian economic landscape. This is likely to keep the Reserve Bank cash rate on hold for the foreseeable future.