Originally published by CMC Markets
Relief that the damage caused by Hurricane Irma was not as bad as feared has removed a source of near-term risk for markets. This clears the way for buyers seeking to take advantage of the value created by recent selling.
This morning’s announcement that the UN has agreed on more economic sanctions against North Korea has not phased markets. The latest UN move on North Korea is being seen as a compromise where Russia and China have succeeded in watering down the tougher sanctions involving crude oil favoured by the US
Safe haven assets like gold and the yen remain relatively soft this morning, indicating that markets are discounting the potential for a response from North Korea in response to the latest UN sanctions
Unlike yesterday, the S&P/ASX 200 is benefitting from buying support for its 2 biggest industry groups, banks and miners, this morning.
An improved tone for industrial metals overnight and relief over Hurricane Irma have seen support for the major miners this morning. However, despite today’s rally, the severity of the recent sell off in copper and mining stocks is symptomatic of a frothy situation where markets remain vulnerable to more profit taking.
Bank stocks on the other hand have been under pressure for some weeks, suggesting potential for a more sustained rally which could see the ASX 200 index approaching the top of its trading range in the 5800/5830 range before long.