CMC Markets: Index sinks, dollar soars

Index sinks, dollar soars

By Will Leys (Sales Trader, CMC Markets)

The ASX200 has disappointed for the second consecutive day, sliding near 55 points in an expansive rout.

International equity leads were soft overnight, but with commodity gains and yesterday’s underperformance, the local market was largely expected to bounce back. It hasn’t though. Instead the index headed south, shrugging off a quarterly GDP beat along the way. The selling is widespread, with all major sectors lower, with the exception of the Materials. The Financials are the worst – a consequence of both falling bond prices and subsequent diminished yield appeal, as well as a stronger AUD overnight.

From a charting perspective, the local index sits in a precarious position, right on the verge of breaching the support level at 5575. Traders will be wary, as the next major level is 125 point lower at 5450.

The situation is very different for the local currency. It’s rallied around two US cents over two days on the back of yesterday’s RBA statement, which failed to satisfy the doves, as well general USD weakness. It is currently trading right on 0.78 USD.

For further comment from CMC Markets please call 02 8221 2137.

ENDS

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