Banks, industrials dominate selling pressure

15.32 AEST, Tuesday 21 May 2013

Banks, industrials dominate selling pressure

By Ben Taylor (Sales Trader, CMC Markets)

US equity markets eased from their record highs overnight, following falls on the dollar index as expectations that Fed Chairman Ben Bernanke will continue his QE mantra. Asian markets have followed suit, with selling pressure dominating in our banks and industrial sectors.

The release of the RBA minutes this morning forecast below average economic growth for 2013. The market moved higher following the RBA minutes, which revealed that an easing-bias remains on the agenda. The fact that they have only used "some of their scope" to ease provides weight to further interest cuts in the following months.

Despite the support we saw for commodities overnight, the major miners have had a mixed performance throughout the trading day. Gold has been the clear favourite benefitting from a weaker USD overnight. The precious metal has advanced 3% in Aussie dollar terms for the day, while gold producer Newcrest, which has recently been hammered by investors, has enjoyed a resurgence of support.

The Aussie dollar has climbed back above 98 cents, however traders remain cautious ahead of Ben Bernanke's comments to congress tomorrow. We should have a clearer indication on the state of the US economy and which direction the central banks will take QE tomorrow.

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