Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market started negative and recovered on the back of the banking sector rebound after WBC moved to raise rates and raise capital. The housing boom cycle has now well and truly moved from denial to fear. Banks are moving to protect themselves and the property investor’s better take notice. As with any boom, the smart once are the investors who get out before the herd. China inflation data was weak and further supports the view that China will do more stimulus with their growth plan. The usual market cycle of running up into US reporting season is then followed by profit taking on growth worries which then sets up the market for the Christmas rally into Dec before US Fed takes centre stage again. China will deliver their growth plan to get things moving again with stimulus plans. We maintain our view from May 2014 that domestic housing bubble will burst in 2015H2/2016H1 period. Banks are moving to protect themselves and RBA will cut rates to deliver them more margin of safety. (VIEW LINK)