Back From The Brink
CMC Markets | Oct 10, 2017 10:26
Originally published by CMC Markets
Investors have apparently decided that Australian consumers may not be quite as fazed by high debt and low wage growth as feared. Solid buying of consumer discretionary stocks led the second day of a recovery in the S&P/ASX 200 index yesterday that sees it comfortably back in the middle to upper part of its trading range.
Support for Telstra (AX:TLS) and consumer discretionary stocks yesterday, continued the pattern of recent months where buyers ultimately support the index, seeking value in sectors that have been sold off.
The question for mining stocks today may be whether they suffer from the flip side of the sector rotation theme. Rio Tinto (AX:RIO) which has been a strong outperformer recently and buoyed by the return of large amounts of cash to shareholders, showed signs of faltering at chart resistance yesterday. Another day of weaker spot iron ore prices in China, could see Rio’s share price begin to fall away from this resistance.
Gold stocks on the other hand could be supported as the gold price continues to recover from the key 61.8% Fibonacci retracement level.
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