By Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Apologies for the late summary, its a busy week for me, but here we go:
After jumping out the gates yesterday on false Chinese stimulus rumors, the ASX200 today finished almost down 0.5% (down over 1% intraday) after the scratchy leads from overnight.
In the short term, there is significant resistance at around 4120 points, the market failing to get above that number (mainly due to the ASX8 – the top 4 miners and bankers which move the market) since the correction of early May:
For now, the market sits wedged between support at 4050 and resistance at 4120 – where’s it going? Nobody knows in the short term… In other Asian markets, its red across the board (except Malaysia and NZ), with the Nikkei 225 down 0.3%, the Hang Seng off by 2% – taking even more than yesterday’s rally, whilst the Shanghai Comp is down 0.2%.
On to the currency markets, and the Aussie gave back all of its recent gains, falling nearly 1 cent today on the poor retail sales print, as 10 year bond yields hit a record low of 3.06%:, marked in yellow on the chart below:
The USD Dollar Index (DXY) continues to strengthen, up another 0.15 points, due mainly to Euro and Pound Sterling weakness, up to 82.63. The Euro is getting hammered in early trade, down to 1.2448 – not good.
Gold is also getting hit hard in the Asian session and now into London trade, falling $7USD per ounce to $1548, whereas in AUD terms the shiny “currency” was actually up $8 to $1584AUD per ounce.
Tonight
The data flow tonight is relatively light, with EMU M3 Money Supply, US Redbook retail snapshot and pending home sales before we get into the avalanche of data on Thurs/Friday.
European markets have all opened in the red, the EuroStoxx down 1%, with falls across the board, as markets continue to react to news that Chinese stimulus is not forthcoming. Kind of strange isn’t it? Shouldn’t markets react positively because a lack of stimulus means underlying economic strength is solid?
Its a similar argument that interest rates must fall (i.e stimulus) to prop up housing, because the housing market is strong, but needs help…
This kind of circular logic nonsense is what drives markets. It doesn’t have to make sense – the market is just people. People are illogical, not rational Vulcans who can work out intrinsic values.
Have a good evening, see you tomorrow.
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