Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market managed to finish in the black on the back of the banks despite resource stocks getting smacked as all commodities fell overnight. All the commodities were down and the safety play pushed up USD. Banks are holding our market in the black on yield trade as the market expects another rate cut in 2016. RBA will be forced to keep cutting rates to fight deflation and slowing economy. We expect another rate cut in 2016 and two cuts in 2017 to drive down the cash rate to 1.0%. AUDUSD remains below 74 cents with stable China inflation cancelling out weak commodity prices. ANZ has already gone ex div while WBC turns ex div on Thursday and NAB/MQG turns ex div on next Tuesday. Banks and the market are susceptible to profit taking risk when they run into a lull ex div period. The market has been trading sideways for the past 2-3 weeks…even after a rate cut with outlook for more cuts…any fall in commodities or bank sector risk will see profit taking. (VIEW LINK)