Global markets mixed, Aussie stocks struggle, British Pound breaks higher, iron ore up again, ASX futures down 3 points

Australia's ASX 200 got off to a great start yesterday, reaching highs just shy of 5,700 points. Unfortunately for investors, the market then shed 66 points in an hour and a half before selling off even further into the afternoon, closing at 5,625. It seems the uncertainly surrounding the direction of Australian monetary policy and the anticipation of tonight's Federal Budget are proving too much for those who might otherwise be buying on this dip. The result is a market that is taking risk off, until that certainty reappears. Aside from Australian home loan data out this morning, there are no AU-specific releases that might urge investors to regain confidence, thus we'll be relying heavily on the prospect of global equity tailwinds to see the ASX 200 pick up again and rally. Tuesday next week will see the release of the RBA minutes, possibly that will shed some light on the thinking around the interest rate outlook for Australia. While RBA boss Glenn Stevens has maintained that there is limited capacity for the Bank to stimulate consumer behaviour, there's certainly plenty the Bank can do to stimulate investor risk appetite. Today's second chart shows the ASX 200 cash CFD index sitting on its three-and-a-half month lows.

Australian bond yields--across the 2, 5, 10 and 15 year maturities--have eased off since the rally into the end of last week. This breather is a welcome sign, but obviously not enough to convince equity investors and corporations not to worry about a tightening credit environment. 

Today's first chart, a follow-up from yesterday, shows the post-election optimism being priced into the British Pound (GBPUSD), which managed to pop its head up through recent selling resistance last night to begin today's session at new short-term highs. This is a positive sign, but it is an impulsive move upwards. Let's see if the currency pair can now consolidate above the US$1.55 level and build upon the recent momentum.

Better news is emerging from Europe, with Greece yesterday authorising a 757 euro repayment to the International Monetary Fund. As we have always discussed, this is a small concession in a long, drawn-out game where the new Greek government is trying to maintain the respect of its anti-austerity followers while facing up to the economic reality that it cannot afford to economically ostracise itself from the rest of Europe. In today's last chart, you can see that the euro--after spending a month rallying--has started to weaken once again. A continuation of this move, along with continued quantitative easing and progress with Greece, would form a very well received confluence of positive factors for European investors.


Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to open a Rivkin Trader account now.

Upcoming economic announcements: Australian home loan data out at 11:30am, Japanese leading economic index at 3pm, EU council meets at 5pm, UK industrial production 6:30pm, US budget statement at 4am, all Sydney time.


This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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