28/7/10 - 8.08am - by James Gerrish
The US market tried to push higher overnight and was buoyed early by a stronger than expected result from UBS in London, however volume was very light and the market really just drifted into the close.
Oil came under pressure on the session based on lack luster consumer confidence data which dropped to its lowest level in 5 months - the print was only marginally below forecasts so thats why the market stayed resilient, however Oil was off by more than $1.
Looking at Crude on the chart its obvious that some degree of technical selling was there given Crude is trading at the top of its trading range.
This is actually a similar pattern to BHP on the local market. We see the stock trade at the upper limit of its trading range and for mine, it does look ripe for some near term weakness. In saying this, I'm going to hedge my comments by highlighting that a break to the upside from a consolidation zone is bullish and an upside move can be quite aggressive - however I do believe its the lower probability scenario.
Overnight, the DOW JONES added +12 points or +0.12% to 10537. The FTSE 100 added +14 points or +0.27% to 5365. Interestingly, both indices finished well off the session highs - which is a sign of weakness. Locally, SPI FUTURES rose +2 points indicating a flat open this morning.
The local market will be firmly focussed on the Consumer Price Index (CPI) due out at 11.30am this morning. The CPI print will go along way to determining whether the RBA will raise interest rates next month. Any print above 1% for the headline rate will increase the chance for a rise. Bear in mind there are some one off impacts in the number (such as the new 25% excise on Tobacco) so the main number will be the underlying figure (which is minus these one off events). Underlying above 0.7% would increase the chance of a rate rise.
