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Share market set for a quiet day

09.47 AEST, Tuesday 14 August 2012

Share market set for a quiet day

By Ric Spooner (Chief Market Analyst, CMC Markets)

World share markets have reached a plateau after adjusting for the possibility of reduced risks in Europe and a surprisingly good employment growth figure in the US last month. Investors appear to have taken valuations about as far as they are going to in the absence of news that further changes the balance of risks.

US retail sales figures tonight will provide some insight into whether the better than expected employment growth figure last month was a one off “rogue number” or an indicator of improving confidence in the economy. Investors will be looking for a positive retail sales number in July to turn around a succession of weaker months.

Markets may struggle to take valuations much higher in the absence of more clarity on initiatives to contain the situation in Europe. The German court’s upcoming decision on the constitutionality of the Euro bailout funds and the next ECB meeting loom as critical benchmark events for markets.

CBA will be the next major bellwether stock to report with results due tomorrow. After a major rally in bank stocks over the past couple of months, any underperformance could impact on overall market confidence. Investors will be looking for earnings growth to meet or exceed consensus expectations and for commentary to provide confirmation that pressure on interest margins is levelling out.

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