The Market Wrap 10-5-13

By Jason Fittler

It was indeed an interesting week in the market.

We had two bits of big news, first that unemployment had dropped down 0.1%. This was a surprise as most market commentators were expecting to see an increase in unemployment.

Next we saw a 0.25% cut in interest rates by the reserve bank, partly on the back of the manufacturing industry lagging at present.

On Thursday night we saw a sell down of our dollar pushing it back towards par with the US. I expect that the interest rate cut was also designed to reduce our dollar. A high dollar is part of the reason for the slowdown of Australia industry as exports become too expensive.

NAB disappointed the market by not increasing their dividend and has paid the price.

Over the past week although the market has moved up 1.67% we note that the finance sector has moved down 0.66% and the material sector has moved up 8.79%.

This would indicate that the market has started to reach a peak, which has been driven by the financial sector and the quest for yield.

The recent rate cut could fuel more cash being pushed into the market but it seem that investors will start to look into the material sector.

This could indicate the end of the current rally.