Australian Stock Market Leads - 03/16/2012

The upbeat sentiment in the U.S. and European markets is seen cascading to Australian share and dollar markets on Friday.

Analysts say another douse of optimism crept up from the economic data generated by the U.S. economy indicating jobless claims falling back to a 4-year low and a higher manufacturing activity has been undertaken in the New York region.

The Dow Jones Industrial Average finished with a 0.4% increase at 13253. The S&P went up 0.6% at 1403, and the Nasdaq rose 0.5% to 3056.

IG Markets strategist Stan Shamu notes that "this was the highest close for the Dow since December 2007."

CMC Markets trading analyst Ben Taylor explains the improving outlook on the U.S. economy will more than compensate for the economic slowdown in China. Although, there is still so much to be seen to fully be out-of-the-woods for the U.S.

Mr Taylor notes that there might be no need for quantitative easing in the U.S. therefore, there is now a gradual shift from bond investing to equities.

"Lasts night's 17 basis points surge in the US ten-year bonds is evident of the pressure build up in treasuries. Once the rollercoaster treasury sale starts we will see asset allocators moving a higher percentage of their holding away from treasuries and back into the market," he adds.

This development will bode well for Australian-denominated bonds with its widening gap with the U.S.-related bonds that also happends to push the AUD to strike a parity with the USD.

"Whilst lower commodity prices affect our mining company profits the weaker AUD should also help to ease the burden," Mr. Taylor points out.

Commodity-related stocks are seen bouncing back today, although gains may not reach the energy-related shares because oil prices and futures shifted downwards based on the speculation that the U.S. and U.K. will unleash some strategic reserves to balance out the market's demands.

With commodities bouncing back from the previous day's falls, the local resource companies are set for a recovery today.

This might not extend to the energy sector, as oil slipped overnight on speculation that the US and UK might release oil from strategic reserves. G

Mr Shamu says that gold-related stocks should also be taken in a positive light and the shares of Newcrest Mining and BHP's ADR point to win some gains.

"In light of a vastly improving US economy, local stocks with high exposure to the US deserve attention, as the recovery remains on track. Some of the stocks to watch are James Hardie and Newscorp. Telstra will be in focus today, with Apple's highly popular third-generation iPad set to go on sale," he adds.

IG MARKETS CHART- 16 March 2012

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.

Please contact IG Markets if you require market commentary or the latest dealing price.