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

 

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

The Price Of Cheese: Cheddar At Eight-Year Low

Food prices decreased 0.5 percent in the year to June 2016, influenced by lower grocery food prices (down 2.3 percent), Statistics New Zealand said today. Compared with June 2015, cheese prices were down 9.5 percent, fresh milk was down 3.9 percent, and yoghurt was down 9.2 percent. More>>

ALSO:

Financial Advisers: New 'Customer-First' Obligations

Goldsmith plans to do away with the current adviser designations which he says have been "unsatisfactory" in that some advisers are obliged to disclose potential conflicts of interest and act in their customers' best interests, but others are not. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news