Daily Market Reports | May 28 2012
By Rudi Filapek-Vandyck
The Big news over the weekend -and I did mean to write this with a capital B- comes from Greece and carries a positive boost for global market sentiment: the Greek populace is embracing a future inside the eurozone. How else to explain the fact that no less than four voter polls in the country put pro-bailout party New Democracy as the number one with an estimated 25.6% and 27.7% of all votes? The previous frontrunner, Syriza, scores between 20.1 and 26% according to the weekend polls.
Free translation: there's hope. Greece and/or the eurozone are not by default doomed. Don't be surprised if the local bourse opens higher today on increased investor optimism.
The SPI futures contract is indicating a slightly lower opening on Monday morning, but there has been no trade since Friday and the suggestion made by the Greek polls has likely rendered the futures index obsolete as a market indicator this morning. Investors should also note US markets will be closed today, which may translate into even lower overall volumes.
Three more weeks before the Greeks use their democratic rights for selecting the country's new leaders and they will hopefully do a better job than last time. The world is hoping. June 17 has been highlighted in many pocket agendas across the globe.
Meanwhile, it's a Big week ahead for economic data. The Australian calendar offers retail sales for April (May 30th), construction work done in Q1 and dwelling approvals for April (both on May 31st). There's also an update on private capex for Q1 and an update on capex intentions. The latter release in particular will attract a lot of attention and might move share prices for mining services providers either way depending on the actual outcome vis-a-vis expectations.
My personal view is and has been that the outlook for the better quality names in the sector (Monadelphous ((MND)) and NRW Holdings ((NWH)) and the likes) continues to support ongoing robust growth, but there have been predictions for gloom by other experts elsewhere and investors seem to have taken the better safe than sorry approach recently. This is providing excellent buying opportunities, the bulls would say.
While the US goes quiet until Tuesday (their time), the week ahead offers the Case-Shiller house price index, consumer confidence, pending home sales, chain store sales and, importantly, the May unemployment numbers. The March quarter GDP result will also be revised on Thursday.
Friday is the first of the month, meaning it's global manufacturing PMI day. China will see the release of both the official and the HSBC survey and both are widely anticipated to have deteriorated slightly from the previous month.
All in all, the underlying bias for continued weakness in key economic data in Australia, China, Europe as well as in the US should keep investor hopes alive that central banks remain ready to add more support to their respective economies and thus by association provide ongoing support for risk assets. That should keep the buyers on weakness confident this week; all else being equal.
Greg Peel will be back in action on June 11.
Your Editor will be on Sky Business this week on Thursday (12-1pm) and later on that day I will be one of the guests on Switzer TV (7-8pm).
For further global economic release dates and local company events please refer to the FNArena Calendar.
