Markets await news before making big moves

15.07 AEST, Tuesday 25 September 2012

Markets await news before making big moves

By Ben Taylor (Sales Trader, CMC Markets)

The list of reasons to sell seems to be weighing heavier than reasons to buy at present. Commodity price slides, a Euro story turnaround that just doesn’t seem to turn, US growth concerns with the pending fiscal cliff, book squaring for the end of month and quarter, and the Chinese economy coming into question are just a few of the issues plaguing our market.

The other side of this story is that we have now seen central banks around the world act in a concerted way to help stabilise their economies and in effect each other’s. There is a massive back stop built into this market and it’s hard to see why investors would place significant shorts when central banks have revealed their hand for all to see.

This leaves me with the conclusion that the markets will stabilise in decreasing volumes until a new piece of news floats our way. There is little reason to continue higher when we are already sitting at these lofty heights however there is also little reason to sell and be later steamrolled by central banks intent on injecting confidence back into the market.

The great unknown for the share market will be how companies fair, will confidence improve and can employment rise? I suspect it will take significant time before we know the answer to these questions and we will continue to ride a somewhat muted rollercoaster until the answers are more evident.

Locally the price of Iron ore continues to turn heads. The high Aussie dollar have some believing the RBA will need to do the heavy lifting as our government seeks to state its economic credibility on delivering a surplus at any cost. I however believe rate cuts that market participants are calling for may not be so forthcoming, as the RBA continues to search for the peak in commodity driven investment.

ends

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