By Greg McKenna in for Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Crash Bang Wallop – a very ugly day in Asia today as the appetite for risk recedes across the globe and investors and traders find the path of least resistance to the down side. The Shanghai B shares fell again today dropping 0.65% with Tokyo off 1.12% while the Hang Seng has made up for yesterday’s surprising rally with a fall of 2.89% as I write.
In Australia the ASX 200 Index fell through that support we highlighted yesterday posting a loss of 2.36% – such is the impact of big breaks in uptrends and make no mistake this one was of the uptrend from the lows of last year. The pressure is now firmly to the downside as the ASX is below the 50, 100 and 200 Day moving averages and that the market closed on its lows today.
The Break up of market action in this screen shot from Bloomy shows there was nowhere to hid on the ASX today – all sectors were down. BHP and RIO both got smashed suggesting that, along with commodities, there is more to this than just Europe. I reckon we are in the midst of a rerating of global growth prospects.
The Aussie dollar has now slipped below 0.9900 and is closing in on support at 0.9830/60 should that give way then the next technical target becomes 0.9595/0.9660 zone for me. In Aussie bonds, rates dropped in sympathy with the equity and risk asset swoon – 3 year swaps are now sitting at 3.34% and so close to the GFC low of 3.28% which has been my target for ages now.
So as we head into European trade and then US trade the markets are in a funk – where the catalyst for a reversal might come from tonight or in the next few days is hard to guess although in a purely technical sense some markets are starting to look oversold in the short term.
Uncertainty is never good for markets and we seem to have that in spades.
Tonight
Tonight of course we’ll be watching any news from Greece or Europe for that matter but it seems with the Greek election some way off this uncertainty can continue. Certainly peripheral bond rates needed to be watched as does the Bank of England inflation report and data in the US including, Building Permits, Industrial Production, Capacity Utilization and Mortgage delinquencies and foreclosures.
I’ve got my tin hat on – good luck
You can find Chris’s Twitter here.
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