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

 


Global market events push local index

10.01 AEDT, Monday 4 February 2013

Global market events push local index into technical resistance zone before reporting season

By Ric Spooner (Chief Market Analyst, CMC Markets)

Weekend news that China’s non-manufacturing PMI rose last month should frank the firm market tone set by Friday’s positive news on US jobs and manufacturing PMI. With China’s services sector now making up around 45% of GDP, a PMI reading of 56.2 helps cement the outlook for overall growth of 8%+ in the March quarter.

As it heads into the reporting season, the local market is also approaching a zone of technical resistance after gaining nearly 6% so far this year. The current rally is mainly about asset allocation and valuation adjustment rather than improved earnings outlook. With many investors’ overweight cash and bonds, money is coming back into equities as investors chase yield pushing price earnings valuations higher.

In this environment, the market may be in a relatively forgiving frame of mind this earnings season. Disappointing results may not be punished to the same extent they were in recent years while positive outlook comments from good quality, high yielding stocks may attract more buying pushing PE values higher.

Even so, the looming resistance levels and consistency of the recent rally create an element of short term risk for the market. We may need a better than expected earnings season to push the index higher without a short term correction first.

There is initial technical resistance around 4940/4950 from the top of the trend channel that has been in place since mid-November. Beyond that the 4976/5025 zone represented the market peaks in 2010 and 2011 and will again form potential resistance. Last week’s low at 4866 represents initial support and below that the early January peak at 4750.

Today’s building approval numbers will be watched closely. While this is a traditionally volatile series, investors will be looking for signs that the trend improvement in recent months is continuing. This will indicate that the domestic economy is beginning to respond to lower interest rates and the outlook for rising house prices.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

ALSO:

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news