Market feels the positive vibes of the US

10.59 AEST, Wednesday 29 May 2013

Market feels the positive vibes of the US

By Niall King (Premium Client Manager, CMC Markets)

The Australian sharemarket has nudged ahead in the early part of this morning's session, picking up on some of the positive vibes from international markets overnight. Mining stocks have been the main beneficiaries so far today, as investors pick up the pieces from recent market falls, with the cash rate proposition looking increasingly dour.

In the US, fundamentals continue to click into gear in the world's largest economy with consumer sentiment and house price data the latest to bolster investor sentiment. Equity valuations continue to out-pace economic growth however, and with cash mounting on corporate balance sheets, the Fed must ponder whether their attempted stimulus is reaching its intended destination.

Having enjoyed a brief reprieve early in the week, the Aussie dollar is under siege once again this morning as strong economic data from the US overnight fuelled buying of its US counterpart. Currently deep in the mid-US95 cent territory, a weaker commodity price outlook is also proving to be an Achilles heel for the local dollar.

The next two days are fraught with danger for the Aussie with a host of economics due locally. While today's Home Sales and Construction data should provide some colour, tomorrows crucial Capital Expenditure report along with Building Approvals are bound to drive short term moves in the local unit as market participants shuffle into position ahead of next weeks' RBA rate decision.

ends

© Scoop Media