Weaker iron ore prices to weigh on market

Weaker iron ore prices to weigh on market

By Ric Spooner (Chief Market Analyst, CMC Markets)

International markets appear to have found a level where they are happy to sit and wait on the next developments in the Greek debt crisis. Greece’s failure to meet the deadline on its IMF payment looks to have been fully anticipated by markets. Barring unknowns, the next critical event for markets will be the outcome of Sunday’s referendum.

In the meantime news of yesterday’s drop in the spot iron ore price is likely to weigh on the materials sector today. This comes against a background of concerns that gains in the spot iron ore price over recent months may not be sustainable given forecast increases in seaborne supply.

Traders will also be focussed on the release of Australian economic data over the next few days including building approvals today; the trade balance on Thursday; and retail sales on Friday. By the end of the week, these partial indicators will provide markets with a clearer picture of economic performance during May and consequently the prospects of any change in the outlook for interest rates. Today’s building data comes against the background of some moderation in the number of approved new buildings in recent months and markets are expecting this to at least stabilise.

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