ASX 200 defies offshore nerves

10.50 AEST, Friday 23 December 2016

ASX 200 defies offshore nerves

By Ric Spooner (Chief Market Analyst, CMC Markets)

The local market has continued this week’s trend by outperforming international markets this morning.

It remains to be seen whether this outperformance is a temporary phenomenon related to this week’s option expiries or whether it indicates ongoing buying interest in the Australian markets that could propel the ASX 200 Index to yet another significant year-end rally next week.

Real Estate and Utility stocks are being supported again today, continuing a consistent theme for the week. However, the energy sector has led the way this morning. Iraq’s statement that it will adhere to production cuts next year provides further comfort that OPEC will comply with its production target providing a firm base for oil prices next year.

Weaker than expected US personal income and spending data in November provides a taste of one source of risk that could emerge for markets early next year. Markets have run hard on the theme of improved US economic activity and rising interest rates. The November data reverses recent strength leaving trend growth in both spending and income at moderate levels. More data like this would encourage the Fed to continue at a glacial pace with monetary tightening and could lead to a New Year correction in the US Dollar.

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