Australian Stock Market Leads - 02/07/2012

The Australian stock market is seen to hold firm, but gains are narrowed down by the grim prospects in Greece, that has yet to settle prevailing debt concerns.

According to analysts from CMC Markets and IG Markets, the local market is anticipating the Reserve Bank's decision to cut rates that could extend some resistance and a downside is more likely in Tuesday's trading.

Ric Spooner, chief market Analyst at CMC Markets notes"the 200 day moving average on the S&P/ASX 200 index currently intersects at around 4325 and the market may hold this resistance zone until the situation in Greece is resolved."

He cites the upside reaction to a rate cut may be muted given that it is anticipated by a majority of analysts and the likelihood that banks will pass on only around 15bps of a 0.25% cut.

Mr Spooner points out that "NAB's quarterly profit report this morning provided some insight into the banking sector with solid cash earnings growth supported by higher revenue from wholesale banking operations but net interest margin declining from 2.28% to 2.19% as the impact of global credit tightening and higher funding costs continues to bite."

Commodity stocks take a beating

Stan Shamu, market analyst IG Markets, cites the commodity market showing more of a reaction to the stall in finalising Greek deals, with copper falling over 1.0% and oil losing close to 1%.

"As a result, the local resource plays will be in for a tough start. BHP's ADR is pointing to a 0.2% fall at the open. Cochlear reports today and analysts will be looking to see the impact that the high Aussie dollar had on its earnings. Bradken is also reporting, with the company likely to benefit from an increase in mining spend, says Shamu.

The local market is likely to trade relatively flat in tight ranges before picking a direction after the rates decision.

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.