One step back

9.30 am AEST Thursday, 29 December 2016

One step back

By Michael McCarthy (chief market strategist, CMC Markets)

After several recent steps forward Asia Pacific markets may come under selling pressure today following negative overnight leads. US indices pulled back from all-time highs, and currencies and commodities largely marked time as professional investors tweaked market exposures.

A flat sectoral performance in New York suggests the selling that prevailed throughout the session was top-down and index based. This indicates concern about the broader market outlook trumped individual stock issues. Local futures markets are pointing to opening losses of around a 0.5% across the region. South Korean industrial production and Hong Kong trade data could affect trading but are unlikely to change the global dial.

The Australian share market reached its high for the year yesterday as buyers scrambled among thin volumes. The volatility index rose. There is potential for a fluky day’s trade, and year end buying could see a U-turn after initial weakness, especially if investors focus on the further lift in iron ore prices overnight.

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