by Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Asian markets are not having a good day today, and alarmingly, after the golden austerity Budget handed down last night, the S&P/ASX200 still fell almost 1% or 39 points to 4275 points. This downtrend – coming after my KC Signal that I warned of previously – erases the gains of April and March:
The ASX200 is now below the 200 day moving average, with support below at 4200 points on the weekly chart to watch.
In other Asian markets, the Nikkei 225 was down 1.5% to 9045 points, with Chinese markets continuing in the red, the Hang Seng down 0.6% and the Shanghai Composite currently down 1.6% and below its short term trendline from late March and rejecting the 200 day moving average, again:
The big news of the day of course, is the move in the AUD which I prefaced this morning. The commodity proxy almost got to parity today – well not really, still 50 pips off at 1.005, and has recovered somewhat before the European open. This move from over 1.08 to near parity hasn’t taken long, from the late February high to now, and if the current trend continues, parity will be reached by the end of this week:
Aussie bonds boomed today – yields falling 5 pips to record lows again, now at 3.36% for the 10 year bond…supply is also getting tight, and if government spending cuts are as forecast as we head back to surplus, will further tighten from here.
Commodities continue to look weak, particularly precious metals, with gold tumbling again, down nearly $15USD an ounce or 1% below $1600USD an ounce to $1590, alongside silver (down 1.5%), now almost below $29USD per ounce. Copper and aluminum look set to get trounced tonight on the LME. In AUD terms gold was only down to $1579 AUD per ounce.
The Stocks
A quick look at the big movers today, in what was supposed to be a “greenlight” for equities according to Alan Kohler responding to the Budget last night. Many mining and related stocks fell today, with less than 30 out of 200 stocks rising (mainly healthcare, e.g Ansel, Ramsay, Resmed, Cochlear, Primary Health) .
Gold stocks were hammered, the biggest being Newcrest Mining (NCM) down just over 5%, Kingsgate (KCN) down nearly 7%, all as spot prices in USD for gold fall overnight and during the Asian session.
Apart from the obvious move to health related stocks (which only make up a small part of the index), as healthcare inflation runs out of control and will be reinforced by the Budget move, today’s move, like the underlying trend in the ASX200, is related to overnight, international moves. The color of the domestic lights don’t matter.
The Futures
European equity markets have opened, with most down although the DAX is flat. Bond markets are not as quiet , although UK gilts and German bunds are flat, the peripheral dirty linen are strongly sold off to start with, with Spanish 10 years trying to reach for 6%, a critical point.
The dataflow tonight is merchandise trade focus – with German and French numbers first then US wholesale trade later.
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By the way. Gabbo is coming.
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