Australian Market Insights: New Highs (25 January 2012)

The Australian Stock Market has recorded early morning gains as of 10: 16 AM, the benchmark The benchmark S&P/ASX200 index is up 22.6 points, or 0.5 per cent, at 4309, while the broader All Ordinaries index is up 23.5 points, or 0.6 per cent, at 4247.7. Analysts are optimistic of the day's trading results, sharing new leads and market insights.

Ben Le Brun, market analyst at Charles Schwab's OptionsXpress says the weak lead from the US had been washed off by the earnings report of Apple Inc. seeing the tech giant's stocks soaring even in afterhours trading. He also noted the positive turnout of the US futures markets. These will give the local sharemarkets a boost.

Stan Shamu, IG Markets Strategist explains that in spite the weakness perceived in the Asian session on Tuesday. He noted markets grew increasingly bearish on Europe and with a poor start for Europe and the US with risk assets struggling. Markets managed to shrug off the Greece news with a broad recovery across risk assets.

Shamu notes that "forecasts are for annual underlying inflation of 2.4%, which is well within the RBA's 2% to 3% target range. This would help make the case for a February rate cut. The retailers are likely to be in focus following the data. Apple's results will likely give the bulls further encouragement. Ahead of the open, we are calling the Aussie market up 0.3% at 4236. The strong recovery in risk assets could see the ASX 200 extend its gains today."

Le Brun also says that the Australian economy at laggards at the start of the first quarter will see the possibility a "CPI index supportive of further rate cuts when the RBA meets in February."

He recommends "to track the movements of the "safe haven" Aussie dollar if further rate cuts are predicted. The Aussie has been remarkably resilient in 2012 and its strength has been taking its toll on some sectors of the share market, especially the health care sector."

He takes note of the performance of Mirabela Nickel, which has been treated very harshly by the market since its quarterly production report on Monday.

"It has been the worst percentage performer in the last two sessions due to the unexpected rise in costs in the December quarter and although costs are coming under control in 2012 they are not coming down fast enough for some brokers, who have rerated the stock down. On the flip side, Paladin continues to go from strength to strength in this risk on environment, as have many other mid-cap miners in 2012. Discovery Metals, Linc & White Energy have all been amongst the top performers this year. Some of those names may be in for another good performance today," explains Le Brun.