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

 


Markets will remain nervous about debt in China

10.04 AEST, Monday 24 June 2013

Investors starting to see value in banks but markets will remain nervous about debt in China


By Ric Spooner (Chief Market Analyst, CMC Markets)

Investors are likely to start the new week cautiously as they gauge ongoing reaction to last week’s Fed announcement and concerns over the credit situation in China.

The valuation adjustment for tapering of Fed stimulus is well underway. While it may have further to go a substantial valuation adjustment has already occurred in the Australian market. The strength of buying in bank stocks off Friday’s lows and similar levels the week before suggests investors chasing dividend yield are starting to see real value around those prices.

Markets will be relieved at news of a sharp drop in short term interest rates in China at the end of last week. However, signs of a possible credit crunch last week have caused the market to take a closer look at the possibility that debt problems in China may in fact be sufficiently serious to lead to downward revisions in the outlook for economic growth. Consequently economic news from China and its money market conditions are likely to remain front and centre as a key driver of Asian stock markets.

From a technical point of view it would take a rally past the May high at 5249 to provide conclusive evidence that the downward correction has ended. Any rally we do see at this stage is more likely to be a corrective bounce in an ongoing move lower. The 200 day moving average represents near term resistance around 4760 with the 50 day average currently cutting in at about 5000. If we do ultimately see a deeper correction the 50 and 61.8% Fibonacci retracements of the 3985/5249 rally form a potential zone of support between about 4450 and 4600.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news