Local market supported by offshore strength

Press Release – CMC Markets

Our local market has been supported by overnight strength in European and US markets which were buoyed by the possibility of a government being formed in Italy and further confirmation of the US housing led recovery.

15.20 AEDT, Thursday 28 February 2013
Local market supported by offshore strength
By Ben Taylor (Sales Trader, CMC Markets)

Our local market has been supported by overnight strength in European and US markets which were buoyed by the possibility of a government being formed in Italy and further confirmation of the US housing led recovery.

Locally however, all eyes were on the first estimate of 2013/14 CapEx expenditure which came in close to estimates at $152.5 billion. The estimate is a very important guide as the RBA manages the transition of growth from the mining boom to growth in consumption and construction.

The numbers were a little higher than the market had expected which placed upward pressure on the dollar and lowered the expectations for a rate cut next Tuesday.

However with the mining investment expected to peak later in the year and with the non-mining sectors a long way from full throttle it’s widely expected that the RBA will use monetary policy to support the economy before the year is out. The next short term guide for interest rates will come in the form of our employment figures.

Talk of Italian political parties seaming together a dubious coalition was all the market needed to turn its frown upside-down. Meanwhile Bernanke’s second day of testimony to Congress also reconfirmed the plan to stick to the schedule with its asset purchasing program. These factors, combined with solid data confirming that the US housing market is driving the US recovery, had the market looking well bid.

With no pull back in sight traders have their ears pinned back, buying up banks and energy plays today for both yield and growth.

ends

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