Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market started flat and moved positive after China growth outlook was in the ball park while leaving option for potential stimulus. The currency once again pushed back above 69 cents while upcoming Chinese New Year unlikely to support stronger commodity prices in the next few weeks. The recent corrections in global markets are being driven by re-alignment of manufacturing market share. China’s move to devaluate the Yuan to recover manufacturing market share from US, Japan and Germany will drive growth worries. Let’s hope the China growth data delivers the catalyst for stabilising the global market selloff. We do see a correction in the US markets in the next 3mths while short term recovery on stabilising data is very likely. We maintain our view that RBA will cut rates in Q2/Q3 as the economy deteriorates with end of mining, manufacturing and housing boom. The low global growth and low interest rates will make global investors to chase yield and drive Aussie equities higher due to the substantial premium yield as the currency bottoms in mid to low 60’s. (VIEW LINK)