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ASX: The eye of the storm

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Fuseworks Media
Fuseworks Media

By Michael McCarthy (chief market strategist, CMC Markets)

Despite the first rate cut in seven years from the Bank of England, markets overnight were becalmed ahead of tonight’s US non-farm payrolls read. The exception is oil, which rallied hard again, and could drive an energy inspired rally of the Australia 200 index today.

US reporting season is drawing to a close. The overall picture remains grim, as both sales and earnings fell for the quarter. The market reaction was benign due to the results coming in slightly above already pessimistic expectations. This dynamic may have implications for the Australian reporting season which gets into full swing next week. No major reports are expected today.

The energy sector is likely to see follow on interest from yesterday’s 2% rally, given another surge in oil prices overnight. Technical analysts are focussed on the bounce off support for West Texas crude around $40, and suggesting this means an initial move back to a point somewhere between $44 and $45 per barrel. Sector heavyweight Woodside lagged yesterday’s rally, and may lead today.

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