Australian Stock Market Leads - 03/14/2012

Positive leads from the international markets are anticipated to redound to Australia's equity and dollar markets on Wednesday, thanks to the improving U.S. economy and the confidence generated in Germany's better economic trends.

Overnight, markets rallied riding on the crest of a better-than-expected US retail sales and the FOMC statement highlighting slow but steady rebound of the U.S. economy.

Although the Fed did not give as much clue whether it would impose further monetary easing, a possibility of QE III has been diminished in the light that 15 out of the 19 U.S. banks passed the stress tests and some of them have announced to issue dividends.

EU also managed to establish some gains during the session with the German DAX leading the market players as the German economy recorded a better-than-expected economic confidence figures, Theso-called ZEW Indicator of Economic Sentiment for Germany has increased by 16.9 points to a level of 22.3 points in March 2012.

According to IG Markets strategist Stan Shamu, "among the major averages, the Dow Jones Industrial Average was up 1.7% at 13178. The S&P advanced 1.8% to 1396 and the Nasdaq climbed 1.9% to finish at 3040. JP Morgan shares rallied after the company increased its dividend and announced a US$15 billion buyback. "

At the open of local markets, it would be more feasible to breach the 4300 level and improve by 0.8% to 4.284. The resources stock are mostly to post gains, but gold could feel the downside of the US dollar's rising value.

"We expect to see broad gains in the cyclical space today after a subdued session yesterday. Currency sensitive stocks with high USD exposure are likely to get a lift from the stronger USD and the Fed acknowledging the improvement in the US economy," Mr Shamu explains.

He adds that though the local market may not exactly mirror the rallies seen in US markets, there would be likely gains to be attained.

Japan's Nikkei is likely to be stand out in the Asian region with its currency, the yen, weakening further.

"The USD/JPY finally broke above 83.00 for the first time since April 20 last year. A weaker yen helps the Nikkei as it reduces pressure on Japan's exporters," the market strategist from IG Markets says.

On the economic front, the scheduled release of the Westpac consumer sentiment and housing data will likely be issued, although results may not be as good given the sluggish sentiment felt in the domestic front in recent weeks.

Chart from IG MARKETS

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