The Market Wrap 6-6-14

By Jason Fittler

Although the market closed lower this week we saw some positive news out of Europe, where interest rates have been cut for the first time in six months.

Iron ore prices stayed lower and that is playing into the hands of the low-cost producers as they simply pull more iron ore out the ground to maintain income, while at the same time putting pressure on the higher cost producers.

It was our banks that rallied on Friday to give the market the last minute kick in needed as the week ended.

This week it was also revealed that around 90% of new bank lending has gone towards the property sector to purchase houses and commercial buildings not towards the business sector for new plant and equipment. This is a clear indicator that business confidence is still low.

It is starting to look like a top for me in certain sectors. I expect to see a rotation out of the top 20 companies and start moving in some of the undervalued sectors.

I am looking at sectors such as industrial, retail and media as many shares in these sectors are looking very cheap.

I may be pulling the cord a bit early, but as business confidence starts to improve (can it get much worse) I expect to see good growth in these sectors.

A safer way to play them would be through an Exchange Traded Fund. (ETF)