The US Fed minutes from their 16-17th of September meeting were released overnight. The minutes stated the Fed thought the economy was close to warranting an interest rate hike, however it was prudent to wait for evidence that a global economic slowdown was not knocking America off course. This saw global stock markets rally, given the reduced expectations of US interest rates rising in October.
Oil had another rise overnight, after Russia said it was ready to meet with other producers to discuss the market, this saw the Australian dollar rally to a three week high. Our market has opened up around 65 points, and this is pushing the market to the top of the recent trading band. With the bank and resource sectors contributing to a significant weighting in our market, without both these sectors rallying, it will be difficult for the index to push much higher. Although sentiment has started to shift around resources, this will be a test of where the market views relative value.
At the portfolio level broad value is no longer present, however we still see value in selective buying (Today’s Best Ideas).
Figure 1 – Current trading band last 2 months
