Mathan Somasundaram

Aussie market started positive and finished positive despite wobbling around with weak China data and RBA keeping rates on hold. The Bank sector dividend yield to bond yield gap only reached these levels in 2008 and 2011 and both times the market bounced hard on yield trade. In an environment of global downgrades and negative rates, Australian bonds and equities are beginning to look very attractive. Save some gun powder as the market is likely to trade with negative bias in the first half of March. We expect another mini recovery rally in the back half of March after the US Fed leaves rates unchanged. In the meantime, keep an eye on the gold equities as market risk rises as we get close to US Fed meeting and old media stocks like APN, PRT, SXL and FXJ as the industry moves to consolidation phase as the regulatory changes come through........…. (VIEW LINK)


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