15.04 AEDT, Tuesday 20 November 2012
Positive gains from overseas leads
By Ben Taylor (Sales Trader, CMC Markets)
Our market has followed on from overseas leads posting positive gains today. The majority of the outperformance has come
from the mining and energy sectors which were oversold on fiscal cliff concerns and also buoyed by US housing sentiment
overnight.
Greek government funding issues and US fiscal cliff concerns have warranted investors remaining underweight equities and
risk overall in the past week. As the risk abates investors reduced their shorts and bid up the market.
The Aussie dollar initially fell on the RBA monetary policy statement which suggested another interest rate cut in the
near term is likely. However, the falls were short lived following talk that the IMF will classify the Aussie dollar as
an official reserve currency as recognition of it growing importance. Any such move is considered supportive for our
currency.
While we have made progress today I would imagine the volatility will drop in the next few days ahead of Thanksgiving.
As the Republicans compromise with the Democrats we could see the deadlock concluded. This outcome will give business
investment, employment and tax issues some much needed certainty. Structure and certainty will benefit the market and I
believe should lead us higher.
The US housing market sentiment is now at levels not seen since the peak in 2006. This is very encouraging news for the
US housing market and proves that the Fed’s low interest rate policy and stimulus measures are providing the much needed
boost to growth.
ends