by Chris Becker
A sea of red across stock markets in Asia – except the “red” Middle Kingdom – where Chinese stocks remain elevated going into the close. The poor lead from European and US bourses has translated into falls, not helped in Japan by continued deflation and deteriorating household spending numbers that came out today. This of course saw the Yen strengthen against everything, with the USDJPY pair falling through to the 101 handle after a false break post the release:
The Japanese Nikkei lost over 1.4% to 16400 points to end the week in a very poor position, just above support.
The Shanghai Composite however is in the green, just above terminal support at 3008 points, now up 0.4% going into the close.
As for the ASX200, bank stocks dragged the local bourse down, closing 0.7% less at 5435 points, not quite reaching my target of 5500 points. The contagion from Deutsche Bank plus a slower Japanese economy will weigh tonight, with Eurostoxx and S&P500 futures down over 1% going into the London session.
In other currencies, the Aussie dollar after slumping through the 76.50 support zone is hovering around 76.20 unable to find direction as we await the London FX session. While oversold, this consolidation period could easily turn into a big move away from the safe harbor status as risk goes into “off” mode. I’m watching the 76 handle for the breakdown:
The data calendar tonight switches to EZ wide CPI for September which could upset the Euro apple cart if it slips into deflation mode. I think the 0.4% expectation is too high and we’ll see something approaching 0.2% which means a stronger Euro. In US-land, its all about personal consumption numbers and a few Fed speeches to watch carefully, plus another oil rig count.
Haveagoodweekend!