China’s market to determine how local market finishes

09.54 AEDT, Tuesday 5 March 2013

China’s market to determine how local market finishes

By Ric Spooner (Chief Market Analyst, CMC Markets)

US stock markets and most major commodities were prepared to look through the news of moves to tighten China’s property market that led to yesterday’s sell off here. Our market will take its early lead from this resilience. We are likely to see an early bounce off yesterday’s low and the support of 20 day moving average in the S&P/ASX 200 index.

Whether this resilience continues through to the close it is likely to depend on China’s market. If China extends its decline, we are likely to follow. Although the impact of the Central Government’s announced property measures is uncertain, the announcement indicates that they are prepared to tolerate more moderate overall economic growth levels in the interests of avoiding an asset bubble and achieving a better balance of income distribution throughout the economy.

The RBA is unlikely to cut interest rates today. Consequently its decision is unlikely to have much impact on today’s market. Events since the RBA’s last meeting, particularly rising share markets, signs of improvement in property, a weaker Aussie against the US dollar and improved international confidence, are all likely to leave the Reserve in wait and see mode at this stage.

http://www.cmcmarkets.com/

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