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ASX200 pushes higher, with pullback in Australian bond yields

ASX200 edges higher, led by energy, utilities and health care sectors, Australian Dollar declines as Turkish Lira’s plunge rattles FX markets and US and European futures mixed; as focus turns to a J. Powell speech.

After a soft and choppy open to the trading week, the ASX200 has managed to push higher today, trading up by 0.6 per cent at time of writing. Though there’s been no single catalyst for what’s been a relatively broad-based move in Australian equities, a pullback in Australian bond yields has provided a small tailwind for valuations, with a jump in China’s stocks when they came online around mid-day today also briefly bolstering market sentiment.

It’s been an usual mix for the ASX200 today, as far as the leaders and laggards go. The defensive utilities sectors, the growth sensitive health care sector, and the oil price driven energy sector are all vying for top billing as the markets leading performer today, with some strength in consumer sectors also helping power the ASX200 along. The materials sector proved a weight on the index, owing to what’s proven to be a period of softness in broader commodity prices, as iron ore prices in particular probe downside, while the real estate sector, at the time of writing, is the only other sector not trading in positive territory.

Movements in FX, and mixed price action across Asia's benchmark indices

A weaker Australian Dollar has probably given the ASX200 a boost too. It’s trading towards the bottom of the 0.7700 handle currently, having taken a spill in early trade today, in reaction to a massive plunge in the Turkish Lira, which came as a response to the move by Turkey’s President Erdogan to fire the country’s central bank head. Safe haven currencies have been the relative outperformers in the FX landscape, with US Dollar Index still waffling indecisively around the 92.00 level.

In broader equities, and also looking to sentiment towards the European and US opens: price action has been mixed across Asia’s benchmark indices, while our prices are pointing to a mixed start for European stocks, and a small tech-led rise for Wall Street equities. The key event in the night ahead will be a speech scheduled to be delivered by US Federal Reserve Chair Jerome Powell at an virtual conference for the Bank of International Settlements. Though the speech won’t be focused on policy exactly, market participants will be keeping a sharp ear for comments about the in vogue topics of inflationary risks, higher yields and the potential for global monetary tightening.

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