Yellen’s remarks create urgency for stock market buyers

Yellen’s remarks and a strong CBA result create urgency for stock market buyers

By Ric Spooner (Chief Market Analyst, CMC Markets)

While Janet Yellen’s remarks last night were very much in line with expectations, the timing was a happy coincidence for stock market bulls.

By yesterday’s close, the S&P/ASX 200 index had risen 5% from its low only five days ago as bargain hunters returned to the market. As time progressed, this rally gathered momentum with buyers seeking to take advantage of the value window created by the recent market correction. When Ms. Yellen’s comments failed to scare the horses, buying momentum continued in international markets last night and will continue in our market this morning as value hunters seek to act before it’s too late.

CBA’s result is likely to assist this morning’s market mood. It has followed ANZ’s quarterly update with cash earnings beating average expectations. Despite CBA’s relatively cautious outlook statement, this result provides the bank with a solid platform to build results into what should be an improving environment for the banking sector.

In a busy period for markets, traders will be alert to the impact of China’s trade data. This looks like one of those data sets that could influence markets in either direction. A significantly better than expected result could increase the momentum of commodity and resource sector buying. However, given latent concerns about China and the Emerging Markets Sector, a negative miss could easily introduce a note of caution to current market optimism.

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