US data expected to outshine Egypt political uncertainty

US data expected to outshine Egypt political uncertainty

By Miguel Audencial (Sales Trader, CMC Markets)

The Australian share market is set to open with modest gains as encouraging US employment data is likely to outshine the political uncertainty in Egypt and Portugal. I would expect the energy sector to outperform in today’s session with the price of crude oil posting notable gains overnight.

The higher than expected US ADP Non-farm employment change figure provided a head start for the US equities market in overnight trading. The better than expected unemployment claims data also offered encouragement to some investors to take on risk in the US equities market. However, what is notable after the release of the US economic data last night is that it did not induce increased speculation regarding the tapering of the Fed’s current bond buying program. If these figures were released a few weeks ago, there was a good possibility that the employment figures released last night would have sent the US equity indices in the other direction.

The DOW’s performance overnight is not a good indication of market sentiment due to the low volumes traded over the shortened session and the upcoming US holiday. The market’s reaction after the release of the Non-Farm Employment Change on Friday night should be a more telling sign of how much risk investors are willing to take during the current economic climate.

Crude oil posted notable gains overnight after a trifecta of factors contributed to its surge. Better than expected US employment data, a larger than expected decrease in inventory, and the political unrest in Egypt all provided a role for the price of crude oil to be traded higher.

It is possible the local equities market will report below-average volumes for today and tomorrow as investors may activate the wait-and-see mode ahead of the 4 July US holiday and the release of the US Non-farm employment figure on Friday night. The release of the building approvals figure in Australia at 11.30am later today may provide some volatility.

ends

© Scoop Media