Australian Stock Market Leads - 03/13/2012

The Australian stock market is set for a minor rebound on Tuesday in spite an underlying anxiety extended by a slowdown in China's economy and the anticipated move of the FOMC on U.S. rates.

Analysts from CMC Markets and IG Markets say the performance of the local market will likely mirror that of the U.S. overnight: slightly toppling the negatives and managed some gains before the end of the trading day.

Among the major averages in the U.S., the Dow Jones Industrial Average managed to rise 0.3% at 12960 on Monday. The S&P was flat at 1371 and the NASDAQ fell 0.2% to finish at 2984.

There was however, a relative weakness associated with the commodities and the resource sector and this might cause a soft opening in the market.

According to IG Markets strategist Stan Shamu, "given the weakness in commodities, the resource sector is likely to struggle at the open today. Should the softness we are witnessing in the Aussie dollar continue, we could start seeing an improvement in some of the currency-sensitive stocks which have been under pressure from a strong AUD."

Mr Shamu singled-out the performance of the Macquarie Group (ASX:MQG) stocks with the recent downgrade from Fitch.

"Fitch warns that returns for a number of MQG's units are likely to remain subdued," Mr Shamu notes.

CMC Markets chief market analyst Mr. Ric Spooner notes that investors might also stay at the sidelines today as they await the decision of the FOMC on U.S. rates

He says that the U.S. Fed's decision to ease or continue with its monetary policies will make a significant impact on global markets.

Mr Spooner also points out the economic standpoints shared by Australia and China. He says that although the two economies have controlled inflation at the moment, the positive impact tend to be outweighed by market concerns of weakening economic activities.

"Saturday's weaker than anticipated export, industrial production and retail sales figures for Friday are a case in point. This creates some uncertainty for the near term revenue outlook of Australian resource stocks," Mr Spooner explains.

On the economic front, the home loans and NAB business confidence data are due for release today.

IG MARKETS CHART