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


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news