Royal Commission Findings To Drive Market

Originally published by CMC Markets

Benign overnight action and New Year holidays across most of Asia could see the findings of the Royal Commission of Inquiry into misconduct in the financial sector dominate trading today. Becalmed currency markets and steady interest rates may mean a focus on shares, with stronger industrial commodities sharing the spotlight.

It’s a full day for Australian investors. Financial stocks comprise 31.55% of the S&P/ASX 200 index, and the sweeping change coming to the sector will keep analysts busy for weeks to come. There is an emerging view that the big four banks may rally from this point given the actions taken already and more certainty about the future. This is a view yet to be tested, although index futures lifted in an immediate response to the report delivered after the cash market close yesterday.

Financial planning groups and mortgage brokers are firmly in the spotlight, with the focus on conflicts of interests, and senior executives from at least three major companies may be facing criminal charges. What is clear at the moment is that no group involved in finance escapes unscathed, and shareholders, customers and employees will all pay a price for the reforms.

Other events due today includes PMIs, retail sales and an interest rate decision from the RBA. It’s also the first day of the corporate reporting season with James Hardie (AX:JHX), Cimic (AX:CIM) and Scentre Group (AX:SCG) fronting shareholders. Throw in an overnight surge in aluminium, nickel, iron ore and steel and predicting the outcome of today’s session is a tough call.