Australian Stock Market: On cautiously optimistic trend

Investors at the Australian Stock Market is expected to rebound albeit cautiously at today trading. Here are the views of top two market analysts on how the market will likely perform on 4 July, Monday.

Stocks on Wall Street rallied 1.4% on Friday after the latest round of manufacturing data came in higher than expectations. Our SPI futures rallied by 48 points in light of this data. Unfortunately gold and oil were both down slightly from Friday's session.

From CMC Markets Asia Pacific analyst Ben Le Brun:

It should be noted that there are still some headwinds facing our market. Friday's slowdown in Chinese manufacturing data signals their econom y coming off the boil in line with the governments tightening of reserve requirements. While in the US there is still the issue of having the government's debt ceiling raised.

Today sees the release of an inflation gauge, job advertisements, building approvals and retail sales data in Australia, so after a positive start we may see some cautious trading ahead of the release of this data. In company news there is media speculation this morning that Treasury Wine Estates (like its parent Fosters) is a potential takeover target. It is rumoured that a Chinese food conglomerate are currently running the ruler over the wine business.

From IG Markets analyst Ben Potter:

The NASDAQ was the top performer, adding 1.5% while the S&P 500 and Dow Jones Industrial Average both rose 1.4%.

Locally, the ASX 200 is called to open the session 1.2% firmer at 4646 following the positive overnight leads from US markets. Gains look likely to be broad-based although we'll probably see the cyclical sectors lead the market higher.

Consumer discretionary names should feel some love after the sector was the top performer in the US, adding 2%. US retailers performed very well, rising 2% with the likes of Amazon jumping 2.5%.

The financial and industrial sector both soared 1.8%, with sentiment likely to boost our local sectors today. The likes of Bank of America, JP Morgan, Wells Fargo and Citigroup were all up more than 1.2% while industrial giants Caterpillar and Deere & Co. added 2% and 2.5% respectively.

Both the energy and materials sectors rose 0.9% and are likely to buoy local traders today. Energy names like ExxonMobil, Chevron and ConocoPhillips rose more than 0.8% as crude oil futures firmed by a modest 0.1% to US$94.75/bbl.

Leads for the materials sector look to be pretty supportive although base metals on the London Metals Exchange were mixed. In London equities trade, Rio Tinto and BHP Billiton added 1% and 0.4% respectively. Locally, BHP's ADR is calling the mining giant to open 1.2% higher at $44.28.

In summary, it looks like a strong open to the new week for the local market following the huge gains seen on Wall Street last week. It's a big day for local economic data with ANZ job ads, Building Approvals and Retail Sales data all due for release at 11.30am. Building approvals are expected to fall by 0.5% following last month's 1.3% fall while retail sales are expected to show a gain of 0.3% following last month's 1.1% rise.

In currency markets, both the EUR/USD and AUD/USD continued their strong push higher on the back of the sharp pickup in risk appetite and expectations that the ECB will raise interest rates later this week. The AUD/USD is currently 1.0774 after hitting highs of 1.0788 during Friday's session; traders will be watching today's heavy data load closely further signs of strength to help justify the huge rise seen over the last week.

The EUR/USD is at 1.4541 after hitting highs of 1.4550 in Friday's trade.

Table of comparison from IG MArkets

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