Flash PMI relief for flat market

15.28 AEST, Tuesday 24 July 2012

Flash PMI relief for flat market
By Ben Taylor (Sales Trader, CMC Markets)

The sharp falls seen in international markets overnight were felt in yesterday’s Australian session, leaving our markets flat today in a state of low volumes and self-pity.

Investors flocked to bonds overnight driving 10 year yields to all-time lows in the UK, Germany and the US. Our market was able to stop the rot following the release of China's flash PMI. The result showed broad improvement across the manufacturing sector in particular the output sub index which jumped to 51.2.

The Flash PMI was relief for a market needing terminal care. While the Flash PMI showed signs of improvement there is still room for China to continue to support easing measures. News of the Flash PMI had our Aussie dollar jumping half a cent regaining part of the losses sustained overnight.

The RBA governor’s speech today also helped to lift our markets sentiment. The speech entitled “the lucky Country” spoke about Australia’s resilience to the global financial crisis as well as our ability to remain somewhat immune given our lucky position.

Today might just be the eye of the storm. Talk of a Greek exit is getting louder as further assistance may prove unwarranted if the Greeks have not measured up to their required targets. A Greek exit may however be beneficial for Spain whose bond yields are paining a bail out picture.

One thing is for sure, The European problems are not going away, a shake-up is just around the corner.

Web: http://www.cmcmarkets.com/

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