Trading Day

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The S&P/ASX 200 Index closed down slightly after a 1.5% drop in the morning, recovering to finish 0.8% or 31 points lower to 4008. The market has slipped below 4000 in the after hours futures market, whilst Euro markets are set to open flat or slightly down and US to open 1% higher, as all eyes are on the European powers (i.e Germany) voting on the expansion of the EFSF tonight, 7pm AEST.

Asian markets were mixed, Japan’s Nikkei 225 closing up 1% to 8701 points, whilst the Hang Seng was steady at 18011 points and Shanghai Composite down 1% to 2366 points.

In other risk assets, the AUD was steady at 98 cents USD, whilst WTI crude slipped to $81.45 USD a barrel. Interestingly, the diversion between WTI and Brent Crude has continued as shown by this great chart from Colin Twiggs:

Gold had another volatile day and is currently at $1623 USD an ounce or $1655 AUD an ounce.

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Movers and Shakers
A mixed day across the board on the ASX, with the biggest gains in healthcare mainly due to CSL, whilst materials and consumer stocks suffered.

The banks were mainly down, with Commonwealth (CBA) steady and ANZ down 0.8%, whilst NAB lost 2% and WBC down 0.5% – no direction in all four cases in the short term. Macquarie (MQG) was steady.

Cochlear (COH) lost another 1.8% and CSL up 3.7% (yes, still long!)

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BHP Billiton (BHP) and Rio Tinto (RIO) had modest losses and were the main culprits dragging the index down. Remember how I said we should rename the ASX200 the ASX8?

Newcrest Mining (NCM) gave back yesterday’s gains, losing 2.7% whilst Fortescue (FMG) lost another 1.5%

Alesco (ALS) was the biggest winner on the ASX200 today, up 7.7% whilst the biggest loser was uranium miner Paladin (PDN) down almost 11% alongside the zinc, nickel and copper miners.

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The Charts
The daily chart below shows that although price action has snuck ASX200 back into its sideways channel and above resistance at 4000 points, the whole of September has seen a downtrend channel form from the 4300 point resistance level. Again, short term momentum has not broken through its resistance level, reflecting internal resistance.

Daily chart of ASX200 - blue line is long term moving average

There is significant resistance at the 4300 point level, the intersection of the medium term downtrend since April (not shown for clarity) and the last 2 high’s since the broad selloff in early August.

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Two significant events await the ASX200 first the German vote on the EFS (from IG Markets):

The biggest event risk on traders’ minds ahead of tonight’s session is the German vote on the expanded powers of the EFSF. The vote (expected around 8pm) is key, and while most see this being voted through, markets will remain nervous ahead of it. Nonetheless, there is plenty of talk from within German Chancellor Angela Merkel’s own party suggesting they will vote against it. If for some moment of lunacy they don’t vote it through, all bets will be off as risk assets such as equities, commodities, risk FX (euro, AUD, NZD) get smashed.

And tomorrow, credit growth and RP Data/Rismark house prices for August, with the possibility of the former hitting a 34 year low.

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