Australian Stock Market Leads - 1 February 2012
Australia's stock market had not moved in pace with the rest of the Asia-Pacific markets on Tuesday but, is seen to remain flat on Wednesday's trading, but some action will push media-related stocks led by Fairfax Ltd.
Analysts from Options Xpress by Charles Schwab and IG Markets may have expressed some wariness in today's trades but they are happy to note that the January month closed with a good finish for the Aussie market with a 5.2% consolidated growth--the best January performance so far in 16 years.
IG Markets analyst Stan Shamu points out that most emerging markets like Egypt (+24% for January) also performed extremely well, indicating that risk appetite has vastly improved.
"Investors are increasingly comfortable buying dips, which is a very encouraging sign for risk assets. In the absence of a catalyst, it seems like markets will continue to consolidate after recent gains," says Shamu.
He perceives an initial weakness will be seen with commodities-related stocks as there was a relatively tough trading night in the commodities space.
Morrison Securities notes that "crude oil futures turned lower Tuesday, as earlier steep gains rapidly evaporated after the dollar rose and negative U.S. macroeconomic data pulled most markets lower. Inventory data are also in focus."
Analysts expect weekly oil inventory data to show U.S. crude oil stocks rose 3 million barrels in the week ended Jan. 27, while refiners trimmed operations by 0.8 percentage point.
Crude stocks are already 3.5% above the five-year average and stand at an eight-week high. Traders said the market also was keeping a close eye on ongoing contract negotiations between a major union and companies operating plants that account for about one-third of nation's refining capacity.
The contract with the United Steel Workers union runs out at midnight Tuesday raising concerns about a potential strike.
Ben Le Brun of OptionsXpress highlights media-related stocks led by Fairfax Media with the reported higher stakes acquired by billionaire Gina Rinehart in the company.
"This comes a day after consumer discretionary retailers got a great lift on promising sales figures from Dick Smith in the breakdown of the Woolworths sales results yesterday. Consumer discretionary shares could be in for another positive day today on this basis, although this time it may well be media shares that are in the limelight," Le Brun adds.