Australian Stock Market Leads - 03/19/2012

A firm and steady opening has set in the Australian stock market today and analysts are closely watching if it would break the barrier resistance of 4320, an indicator that a change in sentiment towards the positive amidst concerns of the economy's correlation to China's economic slowdown may take place.

According to IG Markets and CMC Markets, the Australian stock exchange took off with a firm opening this morning, the S&P/ASX 200 testing resistance around 4320.

"The inability to break through this resistance is symbolic of our markets recent underperformance in response to an indifferent reporting season, concerns over moderating Chinese growth and a strong Australian Dollar," CMC Markets chief market analyst Mr. Ric Spooner points out.

Mr. Spponer adds that "from a technical perspective a clear break above the resistance at around 4318 may provide an insight into a change of heart regarding the Australian market. A break well clear of this level would indicate a preparedness to start playing "catch up" as far as the Australian market is concerned. It would leave relative clear space for a rally to the next major resistance in the 4520/4600 region."

IG Markets strategist Mr Stan Shamu agrees with this as he estimates at least a 0.4% growth of 4294 in the local stock markets during th the morning session led by commodity-related stocks.

He says that "commodities were lifted by a slight retreat in the US dollar. Oil had a big night on Friday and this could translate to a fairly solid session for the local energy names. BHP's ADR is pointing to a 0.8% gain at the open, after having had a fairly tough finish last week. We expect to see other mining names rise mildly following the improvement in risk appetite."

"The Aussie market gained 1.5% last week, which is a massive underperformance when compared to the 2% plus gains seen in US markets," notes Mr Shamu.

Stan Shamu, IG Markets market strategist

Commodities were lifted by a slight retreat in the US dollar. Oil had a big night on Friday and this could translate to a fairly solid session for the local energy names. BHP's ADR is pointing to a 0.8% gain at the open, after having had a fairly tough finish last week. We expect to see other mining names rise mildly following the improvement in risk appetite.

Ahead of the open, we are calling the Aussie market up 0.4% at 4294. Once again, this sees us open near the key 4300 resistance level, which has held back the bulls on several occasions. The Aussie market gained 1.5% last week, which is a massive underperformance when compared to the 2% plus gains seen in US markets. As a result, we get the sense that we need a major catalyst to propel us through this level after having failed to do so successfully this year. There isn't much on the local economic calendar today, and therefore it is difficult to see where a catalyst could come from.

IG MARKETS CHART:

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