IG Markets Afternoon Thoughts

Good afternoon,

Across Asia, regional markets are mostly higher after improving investor sentiment following a successful bond auction in Portugal saw European and US markets post solid gains. The Hang Seng and Nikkei 225 are the top performers, both up 0.5% while the Kospi is 0.1% firmer. On the downside, the Shanghai Composite is 0.2% weaker.

In Australia, the ASX 200 is currently 1.2% firmer at 4782, just off its session highs of 4790. Gains for the day are broad based with the materials sector once again leading the advancers as local investors follow the overnight offshore trend of chasing riskier assets. Unlike yesterday, the index is also benefitting from a strong showing from the financial sector which may have been oversold in recent days on concerns about the flood’s impact on GDP and delayed interest rate hikes.

Today’s gains are all that more impressive because for the first time in a while the market is holding onto its gains. The recent theme has seen the market open higher and drift lower throughout the session, eventually resulting in underperformance versus overseas leads. One of the keys today has been united contribution of our two biggest sectors in the financial and materials sectors.

For the market to move beyond its current trading range and definitively breakout above 4800, we’re going to need to see more days like this.

There’s been an improvement in sentiment today, both locally and offshore. The successful Portuguese bond auction certainly helped eased concerns in Europe while positive data in the US spurred buying. Locally, the fact that the Brisbane River didn’t peak as high as expected has probably helped boost sentiment across Australia too.

ENDS

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