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Key points:
Sycamore sees tech-led US indices consolidating and Dow Jones rotation potential Budget-driven housing changes viewed as a headwind for banks such as CBA (ASX:CBA) and the ASX 200 Aussie dollar outlook remains positive, helped by commodities and miners BHP (ASX:BHP), Rio Tinto (ASX:RIO)
Global correction looms as tech rally pauses, banks under pressure ,Tony Sycamore from IG states that hotter-than-expected US inflation is prompting a pullback in Wall Street’s tech-heavy indices, with the Nasdaq and S&P 500 consolidating after strong gains. Sycamore sees scope for rotation into the Dow Jones, which is yet to post fresh record highs, as investors reassess positioning following the latest CPI data and resilient energy prices.
Locally, Sycamore describes the Australian budget as the most significant in decades, with potential unintended consequences for equities. He highlights Commonwealth Bank of Australia (ASX:CBA), noting sharp weakness and drawing a link between negative gearing changes, housing prices and big bank share prices, given banks’ large exposure to home loans. For the ASX 200, Sycamore notes 15 declines in the past 19 sessions, a break of support near 8600 and a possible move towards 8500 as risk appetite fades.
On currencies and commodities, Sycamore remains constructive on the Australian dollar, supported by strong copper and robust iron ore, citing strength in BHP (ASX:BHP) and Rio Tinto (ASX:RIO). He expects the Aussie to hold above US$0.71 and potentially reach US$0.74 by year-end. Sycamore also sees oil trending higher amid Middle East tensions, and flags Bitcoin’s price action around key technical levels as pivotal for the next major move.
