MARKET COMMENT: S&P/ASX 200 Poised to Rise, Banks May Outperform
June 26 2013 - 8:26PM
Dow Jones News
2354 GMT [Dow Jones] Australia's S&P/ASX 200 may rise about
1% Thursday after global concern over a pullback in central bank
support continued to ease, with the S&P 500 itself up 1%. U.S.
1Q GDP was revised down to 1.8% from 2.4%, suggesting the U.S.
might not be strong enough for the Fed to start withdrawing
stimulus this year as planned. European Central Bank President
Mario Draghi reiterated that monetary policy will remain
accommodative and the ECB's exit from loose monetary policy
"remains distant." Richmond Fed President Jeffrey Lacker said the
Fed is "not anywhere near" the point of decreasing its balance
sheet, and markets may have gotten "a little bit ahead" of the
central bank's thinking. The comments followed a barrage of
rhetoric from Fed officials this week suggesting the market was too
aggressively pricing the end of quantitative easing. U.S. 10-year
bond yields continued to ease from two-year highs, falling 5 basis
points to 2.54% on Wednesday. High-dividend yield stocks, such as
banks, may benefit and domestic funds may support their winning
investments before financial year end. However, the S&P/ASX 200
needs to break the June 19 peak at 4861.4 to confirm a major bottom
is in place. The 200-day moving average at 4785 may be tough
resistance today, with ADRs pointing to a 1.3% fall in BHP
(BHP.AU), and gold stocks likely to tumble after spot gold plunged
more than 4% on Wednesday. Domestic cyclicals could take a bearish
lead from Toll's (TOL.AU) A$200 million writedown in its global
forwarding division. The market will also keep watching China after
recent fear of a credit crunch. Index last 4731.7.
(david.rogers1@wsj.com)
Write to Shani Raja at shani.raja@wsj.com
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