Originally published by CMC Markets
Early Asian trading has seen gold and the US dollar carry on where they left off on Friday, with the dollar softening and gold edging higher. This suggests markets are not entirely immune to risk as another Korean missile test and the increasingly concerning state of US politics drive some safe haven activity.
However, the strength of the US profit reporting season has made it difficult for investors to sell stocks. Investors are hoping that the same forces will sustain valuations in the Australian market as the local profit reporting season unfolds over the coming month. Despite the frenetic volatility of recent weeks, the S&P/ASX 200 index has essentially held its ground as investors wait on the reporting season.
China’s PMI data will be important for market sentiment today given the recent rally in commodities and resource stocks. The manufacturing PMI should indicate ongoing moderate growth with its 12th consecutive read above 50. However, the laws of gravity could s make both mining stocks and the Australian dollar vulnerable to any significant and unexpected weakness in the PMI data.