MARKET COMMENT: S&P/ASX 200 Poised to Rise, Banks May Outperform

2354 GMT [Dow Jones] Australia's S&P/ASX 200 may rise about 1% Thursday after global concern over a pullback in central bank support continued to ease, with the S&P 500 itself up 1%. U.S. 1Q GDP was revised down to 1.8% from 2.4%, suggesting the U.S. might not be strong enough for the Fed to start withdrawing stimulus this year as planned. European Central Bank President Mario Draghi reiterated that monetary policy will remain accommodative and the ECB's exit from loose monetary policy "remains distant." Richmond Fed President Jeffrey Lacker said the Fed is "not anywhere near" the point of decreasing its balance sheet, and markets may have gotten "a little bit ahead" of the central bank's thinking. The comments followed a barrage of rhetoric from Fed officials this week suggesting the market was too aggressively pricing the end of quantitative easing. U.S. 10-year bond yields continued to ease from two-year highs, falling 5 basis points to 2.54% on Wednesday. High-dividend yield stocks, such as banks, may benefit and domestic funds may support their winning investments before financial year end. However, the S&P/ASX 200 needs to break the June 19 peak at 4861.4 to confirm a major bottom is in place. The 200-day moving average at 4785 may be tough resistance today, with ADRs pointing to a 1.3% fall in BHP (BHP.AU), and gold stocks likely to tumble after spot gold plunged more than 4% on Wednesday. Domestic cyclicals could take a bearish lead from Toll's (TOL.AU) A$200 million writedown in its global forwarding division. The market will also keep watching China after recent fear of a credit crunch. Index last 4731.7. ([e-mail])

 
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