Broad decline in the US has minimal impact on local market

Broad decline in the US has minimal impact on local market

By Chay Flack (Equities Dealer, CMC Markets Stockbroking)

The Dow Jones Industrial Average closed down 113.35 points (0.73%) to close at 15337.66 overnight on the back of investors attempting to determine the end of the Fed stimulus. This will continue to contribute to market volatility until greater certainty is available from the Fed.

European stocks rose as flash GDP numbers were better than expected. Technically a recession is two consecutive quarters of negative growth with Germany and France doing the heavy lifting, however due to the complexities of the Eurozone’s constituents I doubt they are out of the woods yet.

For the Australian market today I expect we will see a quieter day compared to Wednesday, though the volumes will be inflated due to Index options expiry.

AMP have reported a net profit of A$393 million, well ahead of the market consensus, however dividends are all the rage at the moment and any fluctuation in a dividend can see a stock man-handled by investors. AMP’s interim dividend is 11.5 cents per share, down from 12.5 in September 2012. Goodman Group and Wesfarmers are also due to report today.

Base and precious metals have improved overnight with Silver reaching a two month high. The Australian dollar has nudged slightly higher to currently trade at 91.26 US cents.

US unemployment claims data is due out tonight and a surprise result may add to investor confusion in the US. A good result could signal company growth and a good economy but could be viewed negatively as the potential for the withdrawal of economic stimulus would be bad for the market. The Fed stimulus will continue to be blamed for most pull backs in the short to medium term.

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