Materials Sector Leads Market Higher

Materials Sector Leads Market Higher

By William Leys (Sales Trader, CMC Markets)

The benchmark ASX200 is higher in morning trade, following advances in Europe and the US overnight.

In Europe, the better than expected British first quarter GDP result pleased the market, but the joy was tempered by the surge in Spanish unemployment. In the US, gains were largely driven by the improved jobless claims data and positive corporate earnings sentiment.

Locally, it's the materials sector leading the market. These gains are largely attributable to rally in both precious and base metals overnight, and will no doubt come as a welcome relief to the recently maligned resource companies. Activity is likely to remain moderate for the rest of the market today, given the lack of major local news.

Investors will look to the Bank of Japan's meeting and monetary policy announcement this afternoon for the next major cue. If Mr Kuroda stays true to form, we can expect him to reinforce the Banks commitment to aggressive easing measures. However, it will be the progress of the plan, rather than the plan itself, which will be scrutinised and ultimately provide direction for the market. A positive take on the comments will support the current 'risk on' sentiment, benefitting equities and the AUD. On the other hand, any ambiguity may lead to a cooling of the recent uptrend.

ENDS

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