Materials lead the race south

10.58 AEST, Monday 27 May 2013

Materials lead the race south

By Niall King (Premium Client Manager, CMC Markets)

The recent bloodbath has continued into a new week with the Australian sharemarket taking further heavy losses in early trade this morning.

None of the major sectors have been spared with Materials leading the race south, as the local market continues to experience aftershocks from last weeks' Nikkei reality check.

Overseas, markets are considering a world without monetary stimulus with international investors weighing up whether or not talk of an end to the stock market rally is actually premature. The bullish quarter believe so, still 'buying the dips' in their unwavering belief that it will take sustained strength in economic data from the US before the Fed's policy tightens significantly.

The Aussie dollar continues to be put to the sword by a combination of falling commodity prices and speculation of both interest rate cuts locally and the US Fed's plans to reduce easing measures. While there is a growing consensus that the slide has much further to run, the local unit appears to have found some solace for the time being in the low 96 cents territory this morning.

With the US is enjoying a long weekend, economics are thin on the ground early this week. The next major checkpoint of the local economy does not really come until Wednesday when we receive the latest data on new home sales and construction.
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