The Australian stock market has opened weaker this morning despite a solid lead from US markets where the S&P 500 index has inched into new high ground. Australian investors on the other hand, have found it difficult to locate their animal spirits in recent days.

In stark contrast to the Australian market, the US index was supported by buying in consumer discretionary stocks after a healthy sales report from technology retailer, Best Buy Co. This provides more encouraging evidence that US consumer spending is restoring trend growth after a first quarter slump.

Australian consumer discretionary retailers may be in focus today as traders assess whether Best Buy’s results can restore some confidence in this sector on the domestic market. While concerns about looming competition from Amazon is seen as an overarching negative for the sector, the reality is that performance has been patchy, with industry stars like JB Hi-Fi maintaining sales guidance while others like Topshop are failing.

This morning’s reports that the 0.06% bank tax rate will be legislated provide bank shareholders with a rare glimmer of relief from their consistent position on the wrong side of political risk. This means that any proposed future increases will require political consensus and will be harder to impose than if the tax could be hiked by regulatory change.

Last night’s oil price look action looks like a classic case of buy the rumour; sell the fact with profit taking triggering a sharp sell-off. The extent of oil&rsquo s sell-off demonstrates that, even with the extended production cuts now agreed, the US oil price may struggle to get past the early to mid-$50’s range for some time yet. This time around, the production agreement may be more difficult to hold together. Fifteen months is a significantly higher hurdle than 6 months, especially if it seems likely there will not be another extension. In these circumstances, the incentive to re-establish market share towards the end of the agreement period may be greater.  

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