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ASX: Resources to undermine results

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Fuseworks Media
Fuseworks Media

By Michael McCarthy (chief market strategist, CMC Markets)

Pressure on commodity prices in overnight trading could see the Australian share market index return to the bottom of its recent trading range, closer to 5,500. This pressure could undermine important results from 18 of Australia’s top 200 companies. However trading conditions are likely to remain light ahead of a speech from Federal Reserve chair Janet Yellen at the conclusion of a meeting of global central bankers tomorrow night.

Investors have plenty to chew over after Woolworths announced a three-legged divestment of its hardware operations ahead of the release of its annual result this morning. Outlook and a strategic shift may appeal, but the underlying operating EBIT result is down 41% - a dramatic fall in a sector prized for earnings certainty. Other major reports due today include Amcor, Perpetual, Flight Centre and Nine Entertainment.

The price of gold broke down through support and copper slumped in overnight trading. Base metals and oil were caught in the downdraft. This kicks out two major sectoral supports for the recent local rallies - Materials and Energy. BHP fell more than 2% in US trading, highlighting a pressure point for traders today.

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