By Christine Gaylican: Subscribe to Christine's RSS feed
February 22, 2012 6:11 PM EST
Further easing is seen in the local stock market on Thursday with investors taking to the sidelines with no significant progress made in the economic fronts of Europe and the U.S.
Although Australian equities have defied overnight leads and rallied in mid-day to closing in the last three days, there will still be some profit-taking commencing during the morning trade today.
IG Markets analyst Cameron Peacock says in a commentary that the Australian Stock Market had managed 3 succeeding days of gains. For the week to date, Mr Peacock cites "the market added 98 points or 2.3%, more than reversing last week's decline of 1.2%. However, today we're looking at losses on the open of approximately 23 points or 0.5%, with the market called to open around the 4270 level."
Analysts said the ongoing political drama that has so far split the ruling Labor Party in Australia has done some damage on investors' confidence and this sentiment will likely be factored in the coming days as the challenge to the Prime Minister's post will ensue with Mr Kevin Rudd's resignation from the Cabinet.
"At this early stage, investors have no clarity as to the probability of success should a challenge by Mr Rudd be confirmed. In any event investors have no guidance on whether a change of leadership would result in any material change to the government's economic policies.
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The possibility that the agreement between the government and Independent parliamentarians may be up for renegotiation or that a successful leadership challenge may be the catalyst for an early election could however, emerge as a source of uncertainty for investors in coming weeks as this situation plays out," explains CMC Markets chief analyst Ric Spooner.
IG Markets analyst Mr Peacock agrees to this observation and cites the impact of the political debacle to the Aussie dollar skidding low from highs around US106.85c to just above US106.00c, and was near US106.35c in late US trade.
The market is expecting another full plate of earning reports to digest: APN News and Media, Breville Group, Cabcharge, Consolidated Media, Iluka Resources, Origin Energy, Ramsay Healthcare and Toll Holdings.
