Glug, glug, glug: AUD, iron ore underwater: Today I'll be watching the movements on the Dalian commodity exchange, particularly iron ore futures, given large amounts of pessimism that are currently engulfing the materials sector. Yes, there should be given our chief export item has nearly halved in value year-to-date, but with positioning and sentiment stretched so far in one direction it's clear that any small uptick in futures will have a leveraged upside impact for the sector, particularly the iron ore 'pure plays'. Elsewhere the energy sector will be under pressure following further steep falls in the crude price overnight although, with OPEC due to meet tomorrow, there is a chance we'll see some short covering. Last but not least and perhaps a little perverse, should Q3 domestic construction data come in under expectations it may actually benefit higher-yielding plays, particularly the banks, given implications for economic rebalancing and hence the outlook for domestic interest rates. (VIEW LINK)


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James Marlay

Great report David