By Chris Becker
Remember to read “Trading Week“, which is normally published for free Saturday morning (but is moving to a new timeslot and format from next week), to put these events and ideas in context.
Not happy Jan! Asian markets stormed off in a huff today as Uncle Ben took away the bigga boobies, and the Chinese Flash PMI result for May – contraction again – spooked everyone even further. The ASX200 which yesterday had some meagre gains, lost over 1% or nearly 45 points today, in direct response to both events (tip: our market moves because of other markets, not because of underlying strength/weakness of our own economy. End tip)
Excuse the candles again, but you can see that the market has rejected the 4120 points breakout level from Monday, with support at 4045 points the next level before heading down to 4000 or so.
Get used to this volatility folks – this will be around for awhile yet.
In other Asian markets, the Nikkei 225 was up almost 1%, which was the only green on a board of red with the Hang Seng down 1.2% and the Shanghai Comp down 1.42% to 2260 points. These losses have been extended on the open of the European sessions, with all major and peripheral markets down 1% or slightly less.
On currency markets, the Aussie has slipped, down to 1.0152 as risk comes off, whilst the Euro/USD cross is down 50 bps as well to 1.2659. The US Dollar Index (DXY) is moving up as a result, now just below 82 points.
I continue to be right about gold – but I’m not bloody happy about it. The false break above $1625 has now reversed and spot gold is below $1600 as the FOMC meeting – only extending Operation Twist, no real money printing as taken the air out of this flailing market. If it fails to breakout above the current downtrend soon, it will likely slump back down to very strong support at $1525-1530 IMO:
In AUD terms (which for some reason is never noted in the financial press) gold is continuning to fall, now at $1572AUD per ounce – holders in AUD terms have seen no real move since early January by the way, but I think there’s a bullish bias here.
Finally, in the debt markets today, Aussie 10 year yields were steady at 3.13%, whilst European bonds have all been bid up across the board as capital seeks dirty linen instead of soiled stocks.
Tonight
Dataflow tonight has already started with flash German French and EMU manufacturing and services PMI’s
The result? Basically contracting faster across the board – only German services was above 50 (just – 50.3) but down on 51.8 prior. Manufacturing across the EMU is nosediving, there’s no question about it.
Later on tonight we get UK retail sales, the usual weekly US jobless claims, and then US flash manufacturing PMI followed by the Philly Fed survey.
This will be a busy night!
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