Not the Prince
Trading Day covers the relevant moves in the Asian stock, commodity, debt and currency markets highlighting trading ideas and investment opportunities. Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
In case you were on Mars today (or sometimes you wish you were, looking at the caliber of federal politics at the moment), the RBA slashed rates severely – by 0.5% – in order to kickstart the “not trending, not in trouble, everything is fine here” economy. You know, the one with the “once in a century boom”.
The local market loved it, with the S&P/ASX200 surging up 33 points or 0.75% to 4429 points, and looking decidedly overbought in the short term (with my own KC signal flashing red here):
I expect a mild fallback from this level, which is a good thing (if you’re a fox or permabull) not bad (if you’re a bear), because all breakouts need to have “3 steps forward, 1 step back” to be sustainable. So a return to resistance at 4350 points would be healthy, but a break below would put the breakout down, and unfortunately permabulls – the Australian stock market is not moved primarily by domestic monetary or fiscal reasons, but by international risk. So watch overseas markets first and foremost!
On that note, the Nikkei 225 was the only major Asian bourse open today, and fell sharply – down nearly 2% to 9350 points, and is tracking the strength in the Yen against the USD (market in yellow below):
The Chinese markets – the SSE Composite and Hang Seng – were closed.
The AUD was of course another recipient of monetary easing, falling nearly 1 cent intraday on release of the rates cut, now at 1.031 against the USD. But let’s put that into perspective again, its back to where it was around ANZAC Day and at the start of April, having already fallen 4.5% since the start of the year, in line with other risk markets:
Aussie bonds were assaulted, and I mean assaulted – yields that is, great if you’re a bond trader/owner, and the biggest comparative mover on bond markets around the world. Yields fell 13 basis points on the 10 years today, down to 3.53%:
Here’s an interesting divergence between the ASX200 and the 10 year yield, with the former accelerating since March:
Not much happened with commodities, with gold relatively steady during the Asian session, currently at $1662USD an ounce whilst thanks to Mr Stevens, in AUD terms it was up $15 to $1611 per ounce.
The Futures
European equity markets are mostly closed today, with only the FTSE open and up slightly. Bond markets are quiet as a result tool. Major data tonight is US centric, where markets remain open, with Redbook and consturction spending alongside the ISM Manufacturing Index – I’m sure Houses and Holes will be all over this, in case you missed his analysis this morning amongst the RBA/house price hoopla – he’s spot on!
You can find our Economic Calendar here.
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