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


Caution likely as investors await developments in Crimea

Caution likely as investor await developments in Crimea and China

By Ric Spooner (Chief Market Analyst, CMC Markets)

The stock market looks likely to start the week with a soft tone. Investors are likely to follow the US lead, taking a cautious approach ahead of the West’s diplomatic response to the situation in Crimea. The nature of any sanctions announced will be a near term focus for markets. The potential for any increase in commodity prices and a reduction in the export revenues on which Russia is reliant are key issues.

Markets will also start the week with a watching brief on China’s economy. Following last week’s soft economic data and news that the trading band for the Yuan will be widened to 2%, markets now attach some probability to the possibility that authorities will move quickly to stimulate the economy with a cut to bank reserve requirements. While markets might have an initial positive reaction to this news, investors will also be conscious that any move by authorities could indicate the extent of their concerns over economic growth.

Despite background concerns over China’s economy, investors in the big resource stocks will appreciate confirmation that BHP will move to implement a buyback when its debt falls to $25bn. On current projections this looks likely to occur in the middle of this year and will be a supportive element for the largest stock in the index

At the end of the day, the S&P/ASX 200 index has gone nowhere so far in 2014. On Friday it finished down 0.4% on its 2013 close. This is not a surprising result given generally full valuations for a lot of stocks. From a technical point of view, one of the emerging possibilities is that the market is forming a large consolidation pattern. The fact that the index formed a peak at the same level as its last major peak in October creates the possibility that a large ascending triangle is forming. The boundaries of this formation would be the recent peaks at 5457 and an upward sloping trend line at around 5070. This represents a range of about 7% of the index. Closer by, the 38.2% Fibonacci retracement of the last major rally provides potential support around 5300.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Shocking Dairy Footage: MPI Failing Our Animals And Damaging Our Reputation

Greens “Nathan Guy needs to urgently look into how his ministry is enforcing animal welfare standards, how these appalling incidents happened under its watch and what it’s going to do prevent similar incidents happening again in the future." More>>


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news