Another day in the red for local market

09.44 AEST, Thursday 13 June 2013

Another day in the red for local market

By Miguel Audencial (Sales Trader, CMC Markets)

The Australian equities market is poised to experience another day in the red after disappointing sessions overnight from its US and European counterparts.

The absence of a major economic data release overnight prompted investors to once again focus their energy on the speculation of when the US Fed will step on the brakes on its current bond buying program. With increased speculation comes increased uncertainty and more often than not traders equate this to increased risk. I would expect the market to go back to fundamentals once additional economic data is disclosed.

Investors will have the US core retail sales data and the weekly unemployment claims data to grab their attention tonight.

Last night’s session also reinforced the notion that the market is similar to a junkie who needs a constant fix, which in this case comes in the form of monetary stimulus. Even a slight indication or the speculation that this stimulus will be scaled down may ignite a sell-off.

In Australia, employment data is due at 11.30am today where the expectation is a loss of about 10,000 jobs. Analysts have missed the bullseye in the past few months by a significant margin and there is a good possibility that this trend will continue. If the unemployment data is significantly better than expected, we may see both the Australian equities market and the Australian dollar have a minor rally. However, if the unemployment number shows that more than expected jobs were lost, there is a good probability that we would see the momentum of the sell-off continue.

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