Wheels of Monetary Stimulus Keep the Markets Rolling

AEST, Monday 29 April 2013

Wheels of Monetary Stimulus Keep the Markets Rolling

By Niall King (Sales Trader, CMC Markets)

The Australian market has started the week in positive territory, edging higher in early trade in spite of Friday's sell-off in the US as the global growth outlook deteriorates. With a splash of mixed corporate earnings thrown in for good measure, the wheels of monetary stimulus appear sufficient to keep equity markets rolling.

Friday's soft GDP reading from the US will strengthen the hand of those at the Fed who want the pace of monetary stimulus maintained. Elsewhere, markets are baying for a rate cut from the ECB when it meets later in the week while the printing of Yen is well underway in Japan.

Locally, the major banks are the star pupils this morning with CBA and NAB leading the way ahead of banking earnings results, while miners BHP and RIO are dragging.

Having slipped from its perch above $1.03 following Friday's late equity sell-off overseas, the Aussie dollar is holding ground around $1.028 in early trade. With bets increasing that the RBA may let the axe fall on interest rates next week following recent inflation data, the Aussie owes much of its current status to last week's upswing in commodity prices.

Local markets are again likely to be influenced by events overseas this week as a host of economic data is released. Equity and commodity moves should give direction to the Aussie dollar early in the week while the focus will then shift as Chinese manufacturing data, an ECB rate decision and non-farm payrolls from the US come into view later in the week.
ENDS

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