ASX200 led higher by value stocks

It’s been a choppy week. It’s been a slightly interrupted week. And as we head into the final stages of Asian trade, it’s shaping up as a positive week. Asian stock indices have generally climbed today, albeit modestly, with the Hong Kong HS50, Japan 225 and Australia 200 all up for the week, with only the range-bound CSI300 struggling, for now, to remain in the green.

The session has been light on new information, with only a smattering of second and third tier data to digest. The Reserve Bank of Australia released its quarterly Statement of Monetary Policy, but the document failed to move the markets, with the AUD/USD slightly lower for the day, as the US dollar retraced some of its overnight declines.

As already outlined at Tuesday’s policy meeting, the central bank’s economic projections have been upgraded once again.

However, the clear takeaway, as it was on Tuesday, is that a serious reconsideration of policy setting won’t come until July – barring a huge shock, the June meeting practically need not go ahead.

The markets digested a slew of Chinese data

This had minimal impact on the markets, at least to time of writing. Overall, the data was positive though, with the trade surplus coming in higher than expected, and services PMI also exceeding estimates.

After yesterday’s spill, the ASX200 has dusted itself off today, to add 0.3%, at time of writing. Though a solid showing, the index is off its intraday highs, after retesting, and failing to breakthrough the 7100 mark. The gains have been driven by a clear tilt to value/cyclicals today. Iron ores astronomical rise is underpinning strength in the materials sector, and the financials and energy sectors are also higher. The tech space has once again been the notable underperformer, shedding around 2% for the day, with the move pushing the space into technical correction and raising the question of whether the Australian tech bubble has popped.

Moving into the European and US sessions, and futures are pointing to a solid open for both region’s major bourses.

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All eyes tonight will be on US Non-Farm Payrolls data, with the consensus estimate indicating the US economy added 990k jobs last month – with some surveyed economists tipping a potential gain of 2.1 million.

Given the wide dispersion of estimates here, it’ll be interesting to see what reaction there may be in the event the data overshoots by a couple of hundred-thousand either side – it may be shrugged off in such an event. The real risk would be if the data is an absolute howler – that would certainly raise questions about the consensus view on the US economy, although that seems to be very unlikely, given the recent spate of strong economic figures.

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