Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Rally Leaves Market Vulnerable To Big Data Week

10.17 AEDT, Monday 3 December 2012

Rally Leaves Market Vulnerable To Big Data Week
By Ric Spooner (Chief Market Analyst, CMC Markets)

The Australian market heads into a new month and a big data week more vulnerable to bad news after rallying 4% from its mid-November low.

Early trade this morning is likely to see the market relatively firm on Friday’s closing levels. The weekend’s announcement of a 50.6 reading for China’s manufacturing PMI should set a firm tone for our market. Although this figure is a little below consensus expectations, it’s consistent with the run of recent data pointing to a recovery in China’s GDP growth.

This morning’s retail sales figure probably won’t change thinking much on tomorrow’s RBA decision. With consumer confidence improving and the impact of previous rate cuts flowing through, the general expectation is for moderate growth in retail sales. If this turns out to be the case it will reinforce a scenario where tomorrow’s rate cut decision will be fairly line ball. If the bank does cut rates it’s likely to be based more on its view of the prospective impact of lower mining investment and tighter government fiscal settings than on any signs of a deterioration in current economic conditions.

Like many other risk markets, the Australian share market has staged a decent rally over the past couple of weeks. This reflects an emerging view that the Fiscal Cliff negotiations in the US are more likely than not to produce a reasonable outcome that avoids pushing the economy back into recession. Even so it’s inevitable that government debt reduction will be a significant drag on the world’s largest economy in coming years. This is likely to prevent GDP growth being much better than about 2.5% even under a relatively optimistic scenario. This together with the risk of fiscal cliff negotiations running into trouble may put a cap on the current share market rally in the near future.

From a technical point of view the recent rally in the ASX 200 may yet prove to be only a correction against a larger decline. At this stage the market would need to take out the October peak at 4582, to provide greater certainty that the medium term rally off the June lows has resumed. There is short term support for the index around the 50 day moving average at 4454. This may hold the market at the moment in the absence of a significant change of sentiment.

CMC Markets Asia Pacific
Web: http://www.cmcmarkets.com/


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Real Estate: Investors Driving Up Auckland Housing Risk - RBNZ

The growing presence of investors in Auckland's property market is increasing the risks, and is likely to both amplify the housing cycle and worsen the potential damage from a downturn both to the financial system and the broader economy, said Reserve Bank deputy governor Grant Spencer. More>>

ALSO:

Annual Record: Overseas Visitors Hit 3 Million Milestone

Visitor arrivals to New Zealand surpassed 3 million for the first time in the July 2015 year, Statistics New Zealand said today. The record-breaking 3,002,982 visitors this year was 7 percent higher than the July 2014 year. More>>

ALSO:

The Future: Thirty Year Infrastructure Plan Released

The Thirty Year New Zealand Infrastructure Plan 2015 sets out New Zealand’s response to the infrastructure challenges we will face over the next three decades, Finance Minister Bill English says. More>>

ALSO:

Shopping: Online GST Discussion Document

GST: Cross-border services, intangibles and goods contains proposals to require overseas suppliers to register and return GST when they sell services (including online products such as e-books, music and videos) to New Zealand consumers. It also outlines the way forward for improving the collection of GST on all goods, including low-value imported goods. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news