After rising 4.2% over the past 8 trading sessions, the stock market may open on a cautious note this morning.
Mining stocks may be stopped in their tracks by last night’s sell-off in copper and news that Rio has been charged with fraud by the US Securities Commission
BHP has maintained F18 production guidance in all its commodities. However, this morning’s production report may not be enough to provide further fuel for the recent rally. While BHP’s guidance indicates it will make up for the September quarter’s 3% decline in iron ore production, future production increases may miss the higher prices available last quarter
US markets provided yet another firm lead for this morning’s local trading. However, last night’s miniscule gain may not be particularly supportive for an Australian rally which is now becoming a bit long in the tooth. US markets are barely inching higher, giving the impression investors see themselves as caught between a rock and a hard place. It’s true that low interest rates and what has so far been a good reporting season are providing no reason to sell. However, current high valuations are equally a constraint on optimism.
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