By Greg McKenna in for Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
What is it with the ASX 200? After days and days of losses and with Asian markets and US equity futures in their night trade ralling today the poor old Australian market found itself unable to even hold onto yesterday’s close. Check out this chart below which is the price action on the ASX20o today – not happy Jan.
Putting the broader market into an even harsher light is the fact that BHP was the key driver of the index’s rally from the lows and you can see that it was above yesterday’s close all day long – certainly the sell off late in the day wasn’t special but it mapped the US Futures moves and no doubt the day traders skipped out happily to their local for a quiet celebration.
In other Asian trade as I write the Nikkei in Tokyo is up 0.86%, the Hang Seng up 0.7% and the Shanghai B shares are up 1.30%. In night futures the Dow is up 0.51% and the S&P 500 0.6%.
Now as to what is driving the better mood in Asian trade today I confess to having no fundamental rationale and the Bloomberg Telly people aren’t offering me anything I can give you. Perhaps it is simply as I wrote in the MacroBusiness Morning earlier today that the recent weakness looks like it has much further to go even though it was a little oversold short term.
The Aussie dollar bounced a little in sympathy with everything else and is now back at the 0.9960 support zone, which now becomes resistance. Marketwatch’s insightful commentary was that the USD was weaker today because their was no bad news – and who could disagree. Perhaps, probably, that’s all it is. So we’ll see how far the bounce takes us and then re-evaluate where the sell zone is once more. Australian interest rate swaps were a smidge higher with the 3 year swap at 3.38% although expectations of RBA cuts over the next 12 months remain above 1%.
So as we head into European trade and then US trade markets are in a much more ebullient mood than they have been for a few days – its not exciting and still very vulnerable to weaker levels and bad news but every rally or selloff needs a rest as I write often so perhaps this is where we are at present.
Tonight
Anything in Europe will of course be important tonight but much has been priced in over the course of May so lower beta to news could be the go for a few days – hopefully. And of course it’s Thursday so of course tonight we are awaiting the release of the weekly Initial Jobless Claims in the US as well as the Bloomberg Consumer Confidence numbers are out. The Philly Fed Index is also very important as is the overall price action in the S&P 500 which to me look like it is breaking the neckline of a big double top (some say an ugly head and shoulders) and biased toward 1277/1300! You be the judge.
You’re only taking my tin hat off to wipe my brow, strategist .
You can find Chris’s Twitter here.
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