Originally published by CMC Markets
Of all the factors influencing traders this morning, the fact that the S&P/ASX 200 is relatively close to the support levels of its 3 month trading range is likely to be the most important. Investors are likely to be looking for value in a range of stocks and this should deliver a steady morning for the stock market notwithstanding North Korean threats and soft US markets
Consistent with recent history, stock markets are looking through threats from North Korea, content to leave any reaction to the gold market with this morning’s rally in gold miners helping to support the materials sector
Last night’s weakness in US markets was heavily influenced by a sharp sell-off in the big, highly valued US tech stocks. Of all the stocks vulnerable to a pullback in valuations due to concerns over rising interest rates, the FANGS loom large. This is a circumstance when the Australian index may benefit from its lack of exposure to this sector
Last night’s rally in oil demonstrates that the OPEC/Russian production cuts are beginning to make a difference. The prospect of a significant production cut from the Kurdish regions at a time when the market is already beginning to tighten and US production is steady, has seen oil make a sharp exit from its recent trading range. This is indicating that the potential for increased shale oil production to cap price rises may now not occur until the US oil price is sustained at levels towards the mid $50’s.